Welcome back to my lesson of the week, and today I want to give some advice on spotting traps early on. To do that, we will look at stocks $IGC, $NBEV, $OGEN, and $PTIE.
$IGC put many people in the hole with its impressive bounce that ended up squeezing out all of the shorts. Even though I took a loss due to my entry not being executed, the problem people seem to be having is coming in on the front side of these crowded trades. That’s something I steer clear of because guessing the front side of a ticker like this can wipe you out completely.
$NBEV appears messy and didn’t hold a crack like I found previously because of the support it shows. Patience is the best response until the resistance starts to form, and you can short for a swing position. We can see similarities with $OGEN, as well as how easy it can trap you. Again, you can avoid these traps if you wait to see resistance because right away, $OGEN breaks the high and gaps down 40%; this allows for traps on both the long side and the short.
Risk management plays a huge role, just as it always does because you could make significant gains, but if you can’t control your risk, small losses quickly become big losses. When I look at $PITE, I see the potential, but when I consider risk management, there’s a lack of resistance, and it presents no real area to risk too, so I remain patient that tomorrow it may become an overstaying gap down.