Look at this chart of Houston American Energy Corporation (AMEX: HUSA)…
It ran +600% in one day. And it traded just under 200 million shares.
If you missed this move, we have something in common.
Of course, it’s bound to happen from time to time. I know I won’t catch every move…
But for some traders, missing big moves like this leads to FOMO, revenge trading, and overtrading.
And if you can’t get it under control, then your trading and results will continue to suffer.
Here’s a lesson you need to learn if you’re ever facing a bad case of FOMO…
Identify a Pattern
There was a big spiker, and I missed it.
The first thing to figure out is whether it’s even playable.
Stocks shoot up and down all day long. But only some of those movements offer strategic profits. If there wasn’t an available strategy to play, don’t waste any time on it.
I had to learn this early on in my trading career. Not all runners give me a chance to play. Stop trying to find a pattern where there isn’t one.
In the case of HUSA, there were actually some great opportunities — three to be exact.
Let’s go over the strategies at play to be ready for next time.
#1: A.M. Gap and Crap Reversal
This is one of my favorite patterns. For a whole tutorial, check out this video…
The basic idea is to find a stock that’s gapping up. Then, when the market opens, it double-bottoms to bounce off of support and continues higher.
Here’s an example of it on HUSA. It dips at first, then spikes but fails to break $4. It falls back down to lows — that’s my opportunity to buy with tight risk — and bounces back up to break highs.
Now on to the mid-day pop…
#2: Mid-Day Breakout
I’m not too mad about missing this one. Usually, stocks don’t break out during the middle of the day. So had I been watching at this point, I probably wouldn’t have taken a position anyway.
But now that I’ve seen this stock break out around noon, I’ll be looking for other runners to make similar moves. The plan here would be to buy close to support in hopes it breaks over resistance…
The support and resistance lines in this situation were 50 cents and $5.50, respectively.
It’s nice to see a spiker with such a clean chart. But that makes the next move hurt so much more. It was such a great profit opportunity…
#3: Late-Day Breakout
The two most volatile hours of the regular trading day are the first and last. Here’s a great example of why it’s so important to watch the last hour of trading.
Sometimes it’s tough after a full day of trading to stay committed. But in volatile markets like this, you’ve gotta learn to buckle down and do the work.
It kept bumping up against resistance at $10. And $9 was obvious support. When the price consolidates and moves sideways like that, it’s a sign that there’s a big upcoming move.
It’s tough to tell if it’ll break out or break down. But I hedge that risk by focusing on the best plays and using tight risk levels.
It hurts to look at these charts and know I missed out. But I’m going to use that feeling to push me to work harder.
I’ll be there next time, and I’ll be ready to make a trade.
How to Catch the Next Runners
Even though oil and gas stocks are hot right now, the volatility makes them dangerous.
Some days, they’ll spike and run higher. Others, they’ll crash and burn.
That’s the nature of trading stocks in this niche. And to gain an edge, I get the hottest market news within minutes of publishing.
I know it sounds like I’m cheating. But the truth is, anyone can subscribe to this news scanner.
It changes the game. But don’t let the power go to your head. Remember to always trade with a plan and cut losses quickly.
Use the right tools,
Roland Wolf
Editor, The Wolf’s Den
