Daily Recap: Learning from Early Market Volatility

Today’s trades didn’t quite work out as planned. I attempted to capitalize on the initial momentum but likely didn’t give the market enough time to settle. Moving forward, I’ve decided to implement a rule: no trades within the first 10 minutes after the market opens. This will hopefully provide a clearer picture of market direction. Today, I ended with a loss of $44.25, bringing my account total to $1,293.00. Let’s delve into the trades.

Trade 1: ADIL

ADIL was on my watchlist after gapping up in the premarket. I noticed a pullback at 7:34 and waited for the candle to close red. When the price began ramping up, I placed a buy order at $2.03, aiming for midway up the previous candle. I got filled at $2.04, but the price then dropped, hitting my stop loss at $1.95, resulting in a $29.25 loss.

This entry wasn’t necessarily bad, but it didn’t work out in my favor. If I had waited 10 minutes after the opening, I could have better assessed the stock’s development and possibly avoided this trade. Additionally, my position size was slightly too high, causing a loss over my 2% limit. Although I’ve improved in calculating position sizes, this one still needed adjustment.

Trade 2: AZTR

AZTR had a significant premarket gap up and was at the top of my watchlist. At the open, it shot up and got halted. Post-halt, the price continued rising, and I looked for a pullback. I placed my buy order at $9.13 before the candle closed. Unfortunately, the price quickly dropped below my stop at $8.93, resulting in a $15.00 loss.

While my position size was appropriate, my entry was premature. Even if I had waited for the candle to close, I likely would have entered on the next candle and still got stopped out. The key lesson here is patience. Waiting at least 10 minutes for volatility to settle could have presented better opportunities.

Reflection

Today was challenging, but I can’t win them all. I learned the importance of waiting for the initial market volatility to settle before trading. Although this means potentially passing on some trades, better opportunities will arise. I’m improving at calculating position sizes, but there’s still room for refinement to stay within my 2% risk rule. Each trading day offers lessons, and I’m committed to learning and growing from them.