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Pattern failures are common and catch a lot of new traders off guard. That is why I d o not play breakouts. Instead I will play pullbacks out of breakouts. I do not know exactly how breakouts occur in penny stocks. Breakout failures may be more common in penny stocks (no idea if this is the case or not).
I have met a trader years ago who traded penny stocks with a system he designed. I honestly had no clue what he was doing most of the time but he was making an average $10k a day.
You said you are trading a former midcap stock that is trading at pennies now. There is probably a good reason why it got hammered all the way down. In personally would not touch any of these stocks. The odds of it going back to its past price is low. The only setup I will play when stocks get hammered is to look for a dead cat bounce. |
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You have a very valid point to this stock that i have considered.
I have found on some small penny stocks that when massive insider buying is preasent they tend to break out and double the percentage, sometimes multiply.. most midcaps a 10% increase is great but i can do 50-100 on most trades but i have a 40% win rate. I need to get to at least a 60% win rate to be doiing nicely...
Which led me to this wonderful site to try new things and explore the options of technical trading. By the way, I am currently using a simulator for all tests therefore not using cash for testing purposes. The simulator will not accept stocks under 2.00, using midcaps in the sim will be for sure. I currenetly rank 4th with like 3.8% this month using value trades.
chris