I like using the 9ema to judge if the stock is overextended or not. But I'm not sure if using it as a risk level is reliable enough when it comes to setting risks on breakout stocks.
When a stock breaks out, i usually put a 10 cent risk when i don't see any other support (or 15 cent if there's reliable support from previous price action).
Usually, I get stopped out because I get scared or the ten cent mark hits. But sometimes, the 9ema is a little below my ten cent risk, and the stock bounces off of that and carries onward.
Knowing that the 9ema is a little more to risk off of, should I use the 9 ema as risk instead of my usual ten cent risk?Keep in mind that in this market, breakouts are mostly weak and a 20 cent profit is not as easy as November 2016. is the risk reward ratio good enough to use the 9ema as support?
The 9ema on the 5m chart is a very popular moving average that many people use which is why it acts as support a lot, especially the first few minutes of the day during a morning spike when there are no pullbacks/support levels to judge from. During a morning spike I use the 9ema to judge if a stock is overextended and if it is I usually wait for a pullback to the 9ema before getting in. This is the logic most people use. However, horizontal lines for support and resistance are always better. In
Lieu of these when they're not available then yes the 9ema also serves as an effective stop. However I like to set my stop as the first candle to make a new low on the 5 min chart. Take a look at PULM this morning. The first red candle made a new low compared to the candle before it and I would have stopped out there. If I had waited for the 9ema then I wouldve lost out on a little bit of profit
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