I wanted to provide a breakdown of my JCP trade from yesterday that I alerted in the Discord Room. I alerted this trade in the morning on 2/26/19 at $1.20.
I really liked the setup on this trade as it has bottomed at $1.20 quite often since early January. I personally enjoy trading stocks at Support as you are catching the bottom entry on the trade and if the support level ends up breaking down I have a clear stop loss level and generally results in a very limited loss. Think about it this way, JCP has support at $1.20 if I enter at that level and say I put a stop at $1.16-$1.18, this would result in a 2% loss on the trade. My Price Target was $1.26-$1.27 which was 5%-6%. See how the risk vs. reward is in my favor. I am risking a 2% loss for a 6% gain, roughly 3 to 1 risk to reward. I go into more detail about risk vs. reward in this article.
Let's dive into the chart breakdown:
The chart above is the 6 month daily chart of JCP. AS you can see I drew the support level at $1.20. The way I personally identify a support level is by looking for a level in which the stock has touched and gone up quite a few times. This stock is one that is very easy to spot as you can see it consistently go to $1.20 and then go back up.
Let's look at the 5 minute chart from 2/26 and 2/27 to see entry and exit:
The chart above shows our entry at $1.20, as you can see I was patient with my buy, I actually wanted to get in this trade on 2/25 but my $1.20 buy never hit. You can see I never "chased" the stock or moved my buy up, I trusted the technicals and got the fill at $1.20 just like I wanted. Stock had a nice slow rise throughout the day and I actually had a sell at $1.26 on 2/26 but never got a fill going into close. The next morning I felt pretty confident we would get a runnup going into ER on this stock so I moved my sell up from $1.26 to $1.27 and as you can see from the chart, got the runnup I expected and was able to fill an exit for 6%. I had about 5,000 shares in this trade and was able to net roughly $300. Not bad for holding less than 24 hours! 💰️
Hope you enjoyed this breakdown and learned something from it. Feel free to ask questions or leave feedback in the comments below!