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Josh Dunn

Daily Recap: A Day of Wins and Lessons in Trading

Today was a remarkable day in my trading journey. I ended the day with a $75 profit from my single trade, which felt fantastic. Before diving into the details of that successful trade, I want to share some valuable lessons from a couple of practice trades I made earlier in the day.

Practice Trades and Learnings

In my first practice trade, I decided to hold onto a stock for a longer period. This turned out to be a mistake. The stock started to decline, and I ended up losing money. This experience reinforced the importance of sticking to my stop loss and not holding onto losing positions in the hope of a turnaround. The lesson here is clear: always honor the stop loss to prevent further losses.

My second practice trade involved a low-volume stock. This trade didn’t work out well either, as the stock moved too slowly and didn’t generate significant gains. I incurred a small loss primarily because the stock stayed at one price for too long. The takeaway from this trade is that even if a stock appears on the scanner, it’s crucial to avoid trading it if it lacks sufficient volume.

The Main Trade of the Day: CNSP

Now, let’s talk about the main event: my trade with CNSP. I monitored CNSP during the premarket because it had gapped up significantly and was the top gapper of the day. Although I missed a few good opportunities early on with other stocks, I kept an eye on CNSP because of its strong volume, which indicated potential.

At 7:51, I identified a resistance level at $2.54, where the price had previously bounced off multiple times. I decided that if the price broke this resistance, I would buy in. This decision was slightly risky since the MACD was still below the zero line, although it had crossed over. Ideally, I should have waited for a better setup, but I proceeded with caution.

When the price broke the $2.54 resistance, I entered the trade at $2.55 at 7:53. As anticipated, the price surged after breaking the resistance, turning the former resistance into new support. The price climbed rapidly, and I decided to lock in my profits at $2.75, resulting in a $75 gain and a profit/loss ratio of nearly 3.5. This was a significant improvement from yesterday when I held onto my position for too long.

The price continued to rise to $2.95 before crashing down to $2.26. While I could have made a bit more, I consider this a big win, especially given the less-than-perfect setup.

Key Takeaways

Today’s trading reinforced several important lessons:

  1. Stick to Your Stop Loss: Holding onto losing positions in hopes of a rebound is usually detrimental.
  2. Avoid Low-Volume Stocks: Even if they appear on scanners, low-volume stocks often lack the necessary movement for profitable trades.
  3. Capitalize on Resistance Breaks: Breaking resistance can lead to quick gains, but it’s essential to monitor indicators and manage risks appropriately.
  4. Take Profits Wisely: Locking in profits at the right moment can prevent potential losses from sudden price drops.

Overall, today was a day of learning and success. I made a profitable trade based on a resistance level breakthrough and gained valuable insights from my practice trades. Moving forward, I’ll continue focusing on high-volume short trades and adhering to my stop loss strategy.