For this trade, my decision wasn’t solely based on the directionality of equities or this stock’s chart pattern. Instead, I had an earnings-driven outlook and was looking to take advantage of the upcoming earnings day. Below are my notes from prior to the trade:
ROKU – Long – This is interesting, so I want to talk about it. This hit a low at the end of last year, and pushed up strong through the first month+ of the year. There was a fairly deep pullback early-mid Feb. but then there was a HUGE spike over the next 3 days. From that spike (up to ~$76), price pulled back and through most of march stayed in a choppy range between roughly $60 and $68. This morning, price pushed up strong at the open, and took out the range highs, pushing above $68; but almost immediately has pulled back and is now sitting at the highs of that range.
Sheesh, there’s a LOT of chop here, and a lot of areas I could consider resistance where price could stall or I could put an entry order. But I don’t want to leave it alone, because it was such large break of a significant resistance area. Looking, again, at that prior spike in mid February, and it happened around earnings. There are more earnings at the end of this month, and it wouldn’t surprise me to see the same thing. The only thing is, my trading style doesn’t really allow for me to hold for that long… That said, pricing in is a thing, so I want to get in early — I just don’t want to get stopped out at break even or, worse, a full exit, just before price shoots up.
I think I’m just going to take a longer-term bias on this, have a wider stop, a smaller position size, and remember that I’m thinking about earnings here and have that play in to how I manage this trade.
Entry – $67.02
Entry – $67.00
Target – $76.00
Stop – $65.50
R:R – 6.00
Exit – $65.52
Price rallied hard, enough to trigger me in to the trade and pushing up enough to make it 90% of the way to 1R. But, just as quickly — within the same candle, and under 10 minutes — dropped hard falling all the way to my stop-loss.
The move happened so fast, that I’m not sure I would’ve been able to move my stop in time, had I been actively managing it. Honestly, I’m not sure I would have moved my stop even if I’d been right on top of this. I took the trade on the 2h chart, expecting things to be slow-moving, so near 1R isn’t enough, according to my rules, to move my stop; so I probably would have ended up leaving it, resulting in the same outcome.
Really, the only thing I need to say about this trade is that I need to stay in my lane with my trades. I was looking at earnings, which I’ve never done before; and this was a ranging stock, rather than a trending one. I got a little overzealous, a little overconfident, and it bit me in the butt. The bright side being that I recognized I wasn’t in my lane, and took a smaller position size. Time to just keep swimming and looking for opportunities that I’m more confident will produce.