Don’t avoid stocks under $10
I still don't see an advantage in avoiding stocks under $10. I believe liquidity surges have a greater impact on price movement.
The reasoning behind a $10 minimum cutoff for share price is to engage with stocks that are likely to have institutional holdings, which tend to favor positional traders, in my opinion. If you’re trailing a position based on a shorter-term moving average, it often won't be effective.
A $10 cutoff will cause you to miss out on many themes that are trending this month, like the initial moves in $NuScale Power(SMR)$ $Oklo Inc.(OKLO)$, just to name a couple.
It's about rule-based profit taking end of the day. I get chopped out those names really quickly unless I design to 20/50-MA trailing on normal circumstances. if earnings surprise, it's another matter.
$Stride(LRN)$ and maybe $General Motors(GM)$ (but they are under $100 also. $Netflix(NFLX)$ didn't work at $700s
I would keep a day-low stop as usual if entering from LoD below 60% ATR. Widening stops after experiencing a few losses from the same trade can make achieving a positive outcome difficult because you miss out on potential home runs.
A 1R stop remains a 1R stop, regardless of whether it's wide or tight. However, a small-sized 1R stop due to widening of price stop won't provide the winning multiples before the stock retraces back down.
It can be psychologically challenging to re-enter a failed trade, especially if you've hit a full stop on those occasions. However, if the price and technical structure remain intact, the underlying hypothesis of the idea hasn’t changed.
Overshoots in price action are common in trading, so it's essential to think in terms of the law of large numbers when considering your trading expectancy.
Focus on 500s, not just 10.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
