DFFN is a Biotech stock that had news about receiving FDA protocol guidance for phase 3 clinical trials with patients. I knew this was not an ideal sector to be trading in but I've been seeing biotech stocks running here and there. So I thought this might have potential based on the news. Looking at the long term chart the stock doesn't hold it's spikes very long so I knew not to overstay my welcome. During premarket hours I thought that the stock was up too much and was thinking that it might come down first before making new highs. Once it began to panic at the market open the stock found support @ $2.25 (defined as risk) so I bought in thinking it would bounce at least 15%-20%, which I defined as my exit. Sadly, the volume wasn't large enough to convince more buyers into the stock and it eventually hit my risk and I exited.
Things to look out for next time in biotech sector:
Wait for more convincing volume before entering a trade. DUH!
Only trade on big news like 10Q's and/or 8K's, positive clinical results and/or approvals (like TRXC).
Maybe not dip buy biotech stocks at all and wait to buy at inter/multi-day breakout levels instead?
If someone has anything else to add about this trade/stock/sector I would appreciate your feedback.
Try to buy as close to support levels as possible. If you are looking to buy breakouts, buying at the breakout level can be tough. Usually when a stock hits a breakout level it takes off and it's tough to get in. A lot of times, after the breakout there is a pullback and it bounces off of the breakout level. The bounce is usally easier to get in. Otherwise, you could also buy a bit below the breakout level to help protect yourself if the breakout fails.
Thanks @RockRobster, I'll look to incorporate this method into my plans for future trade entries.
No problem. You're welcome. Hope that helps.
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