Trading What You Know: During Volatile Times
Posted by Stock Online Trader in Stock Review on 02-10-2010
Whenever the market has acted crazy and volatile I prefer to play only few selected stocks. Goldman Sachs and Potash are my favorite during those times. These stocks generally remain more stable and provide decent swing both ways each day. If you are nimble and quick scalper there is money to be made.
The pre-market action suggested big green day meaning squeezing the shorts. I wanted to take this opportunity to go long on GS. However GS did not spike as much as the market was up. Price action was not completely right. However I took a long position with GS @ 152.10, hoping for a quick dollar gain. To my surprise it was weak all morning and wasn’t looking strong. Trying to be conservative I sold out @ 152.20. Few minutes later it took a deep dive falling to 149.50, making me feel good about my almost break even sell. However once hitting 149.50, it spiked back up to hit 153.00. This is what I meant about providing decent swing both ways. I did not trade GS after that.
MEE looked ready to squeeze shorts today. I took long position @ 40.05 hoping for more upside. As it hit 40.40, I raised my stop to 40.25 to atleast gain 20 cent profit. MEE dropped back from 40.40 to take out my stop @40.24, dropping back to 39.50, before it swung back to 40.75. Crazy crazy swings. Another thing to remember is not play too big in these times. This way you can survive these swings and not be stopped out all the time.
POT was looking toppy @106. I took a short position @106.22, hoping for some selloff in the end. I did not get a big selloff, but POT did fall back to 105.50 levels. I covered quickly @105.84, taking 38cent gain of the table. After my buy to cover, POT spiked again till @107, before giving up that gain again to close below 106. Again being nimble and quick was the name of the game.
I plan to continue trading few selective stocks and being a quick scalper. Also I plan to play with smaller quantity so as to allow for wild swings and not be stopped out.
