• Jan

Small cap stocks, part two




This article will outline some of the specific patterns that can be traded in small-cap equities, some of which are more frequent and some less frequent patterns. Overall it allows the trader to stack playbook with more diversity even if the plays are not that frequently present.



Early pre market news play



The idea behind buying news catalysts is by no means new, but in small caps buying just all news randomly can be a challenging approach since many price spikes on early news releases tend to fade very quickly. Sorting the liquidity variables on assets is a way to increase the chances of which news to avoid buying early (which will be the majority of it) and which might be worth it. The issue is however that liquidity can be rather dry in early stages of pre-market hours, which by default lowers the trader's RR profile on trade, especially if it means exiting long position on the bid and not on ask. My personal preference is to only approach this on specific assets, with specific behavior of pre-market liquidity, those that have a higher chance of being rigged by market makers into the day, where the MMs will/might push the asset up 50 or 100% in pre-market after news release to create the needed liquidity and playground for the short squeezing later on.



There are basically two main ways to play the pre market news, and reasons behind them:


-First is fundamental reason. Trader buys the news due to the impact of news in relation to companies market cap. News has to be very strong and un-expected for such play to be valid.

-Second is anticipation of rigging activity. Buying the small cap stock news in expectation that market makers will pick up the liquidity and push the asset for their own agenda. The idea behind is, that the stocks that will get manipulated trough the day are all pushed at least 50% up by market makers initially in pre market in order to create enough interest trough the day.




Anticipation of rigging activity play: For this type of long play the asset needs to have variables as outlined below:

-is low float (under 5 million shares float)

-the asset has no trapped volume/bagholders on daily chart over the last 10 month period -the asset had recent reverse split and has a history of reverse splits and dilutions

-company is in need of cash (3 months or less cash on hand) and might have an underwriter/rigger with the intention to push the price up for offering later on in next few days

-the asset has a 50k volume candle in the first 10 candles of 1 Minute chart after the news is released, usually, this will happen between 7:00 and 7:20 of NY time. This variable is a must as the majority of rigged plays with huge runs have this variable present. Additionally, the price must not fade under this candle. The premise of importance on this variable is the assumption that this candle is created by rigger (single player) and not general market, showing aggression and the intent to keep the pressure on the asset to the upside.

News "quality" actually does not matter much, at least from my observations, the majority of those are biotech Phase 1/2 news or news related to orders and products. However my assumption is not based on proper research on splitting the news and actual % moves into different categories, so take that with a grain of salt. There could be certain cohesiveness in a specific section of news but would require some research to prove it, and it might not be substantial enough to be useful after all (too close to 50-50). Basing an entry can be difficult, and since there are no clean structural guides as price in the early pre-market will be too under-developed, there are essentially going to be two types of entries most common. One is either breakout long on the cupping structure or the other will be using a full-sized 50k volume candle as the entry initiation as well as risk guide, as shown on the example below:




It is very important to note that the 50k volume candle must not push price up huge amount of %. Ideally the weaker the % push the better, if this 50k volume candle pushes asset up a lot then the play is no longer valid.



The downside of this play is, that it is not very frequent. It might sound so since news on biotech stocks is released every day, but the majority of them will not fit a long scenario as described above. Additionally market on biotech goes in phases of certain inconsistency, which means that there will be months where many of such plays are stacked together within few days apart (Q4 of 2019) and then there might be months of where no proper plays are given at all (Q1 2020). But just like any setup with an edge, this is just one additional setup to stack into the playbook to compliment it, not every setup needs to be highly consistent.


Some examples outlined below, none of which was rigged on the day however. This shows that defining if ticker will or wont be rigged ahead is rather difficult.









Fundamental play:


Ideally, to trade on pre-market news, the news should be significant in its impact on the company. One way to measure that is to compare the news potential capital value / long term exposure relative to the companies market cap. The more dollars that it can bring to the company relative to the market cap of the company the better. This mainly applies to news type of "orders" and does not apply to Phase 1/2/3 type of news related to biotechnology companies.

Example of a stronger type of news relative to a market cap of the company on ticker WORX (April 13th):

" SCWorx Corp. (WORX)announced today that it has received a committed purchase order from Rethink My Healthcare, a U.S.-based virtual healthcare network, for two million COVID-19 Rapid Testing Units, with provision for additional weekly orders of 2 million units for 23 weeks, valued at $35M per week. "

The market cap of the company at the time of news was approx 30 million USD.

Pre-market reaction on the news on ticker WORX and a strong intraday push resulted from it:





Trading dilution




When it comes to small capitalization stocks there are often structural funding issues that the company has due to lack of revenues, especially when it comes to the biotechnology sector. Due to such reasons, companies are often forced to raise capital through financing to proceed with development/research or operational activities in general which creates an issue for shareholders and value of the stock as it increases the supply of stock in circulation and devaluing its value. Such conditions might create opportunities for short sellers to use potential dilutions to initiate short positions if the company is in need to raise capital.

This article will not go by any means in-depth on how to read balance sheets, capital structure or burn ratios for companies, there are plenty of great sources to find about that on internet, this article will strictly focus on how to extract the edge from 2 or 3 dilution cases where short seller can participate.

A decent site to use is BAMSEC.com to check trough fillings of the company such as balance sheet, monthly cash burn ratio, previous dilutions, currently active or non-active shelves, etc... All this has to be checked in detail for someone who would like to short ahead of the offering for a proactive method. And to always keep in mind, just because one does an excellent job at checking all the fillings and financial status of the company it is still rather difficult to be on point when the company executes the offering, due to many unknown factors.

Overall, short-seller has two ways to participate in the dilution activity of a company, one is to be proactive and initiate a position ahead in the expectation that the company will release offering and dilute. The second way is to be reactive and to wait for offering to be released and then position on the ticker.

Advantages and disadvantages of either methods:

Proactive:

-advantage: Trader can extract a lot more profits and potentially much higher RR. -disadvantage: A lot lower probability to be accurate on the right day/hour for offering to be released.

Reactive:

-advantage: Higher probability to be on the side of sellers (and lower probability of large loss), especially if stock is far from offering price level by the time when the offering is released. -disadvantage: Lower profit opportunity and RR overall, since the trader is chasing into the offering release.



Additional to that there are other dilutions such as at the market selling of warrants, or trough the market makers of shares that company is willing to get rid of, but those are much more un-identified as a pattern and too conceptual at least from my research and therefore will not be mentioned as a play.


An example of offering news release (ticker AYTU):

" ENGLEWOOD, CO / ACCESSWIRE / March 19, 2020 /Aytu BioScience, Inc. (AYTU), a specialty pharmaceutical company focused on commercializing novel products that address significant patient needs, today announced that it has entered into definitive agreements with several healthcare-focused institutional investors for the purchase and sale of an aggregate 12,539,187 shares of Aytu's common stock and warrants to purchase an aggregate of up to 12,539,187 shares of common stock, at a combined purchase price of $1.595 per share and associated warrant, in a registered direct offering priced at-the-market under Nasdaq rules. The closing of the offering is expected to occur on or about March 23, 2020, subject to the satisfaction of customary closing conditions."



Two major components that are important to look in offering news is the amount of shares (relative to float size) and the price per share released.



Pre market offering

This is the most common form of offering on the stock asset, coming at the pre-market hours, usually between 7:00 and 8:30 NY eastern time (default Nasdaq time). Actual time window that has the highest frequency of pre-market offering is actually between 8:00 and 8:30 which allows the trader to focus and narrow down as the riskiest area if one is long in pre-market, or potentially larger reward area if short, on the assets/companies that might be under the potential condition to release an offering.

Very important time window to keep in mind, especially on second day after the stock had a major run / push on its previous day. Getting stuck with long position and hammered with offering is something that can happen around this time window.


Variables for potential pre-market offering play:


-Stock trades on weak pre-market volume (500 or 1k shares of volume per 1 Minute candle for example). -Weak liquidity with micro gaps between candles (check other articles to know what this means). -The company is strapped for cash and can raise capital/offering. -The stock has had on previous day major run-up with at least 50% move and has traded volume at least 10 million shares on that day.


Trading ahead of potential pre-market offerings involves a large amount of speculation, with other words it is not possible to achieve high accuracy over 100 samples. For this reason, it is required for a trader to have a solid risk management method on trades so that in cases where the offering has not released the trader either has a neutral position at break-even or small loss at maximum. This overtime balances out the larger gains on the cases where the trader does catch an offering. If time passes 9:00 in pre market hours, and the offering is not yet released the trader should cancel or exit position, if that was the sole reason to participate. Below is a conceptual example of pre-market offering on the second day and its variables:




It is very important to keep in mind that this type of pre-market offering ONLY relates to small-cap tickers that had a strong volume run on the first day, and the offering is released right at the next day. This ensures that a large number of underwater buyers from day 1 will be pushed into panic mode in large volumes and will participate in selling cascade.

The pre-market offerings that are released on tickers on 5th 10th or 15th+ day after initial run do not behave the same, therefore it is important to keep this variable on focus for this type of play. This is an important distinction to make. The way how time and liquidity are positioned into the offering is very important as that determines how the price will respond. The reason why low volume in pre-market hour matters is because large players are much more informed or knowledgeable to know when the offering is likely to hit, and if there is no major volume participating on the second day in the pre-market, it might signal that large players might be expecting something. Now that does not mean that large players do not get trapped in offerings as well, it just means that they are less likely to. However, that variable could just be coincidence/overlap since there is not enough data to confirm and exclude this variable as for that it would require 500 or 1000 samples at minimum along with some inside information.



Shorting short squeeze soft clearout in mid-day (after pre-market offering):


Below is a conceptual example of a short squeeze after offering release. The majority of those squeezes will happen after 11:30 AM of NY time, once there is enough short squeeze liquidity built into the ticker. Liquidation/squeeze allows the trader to take advantage and short against, since the majority of liquidation moves tend to fade back to where the move started.





Below is example of squeeze push early on open and fade after it on ticker OBLN:




Below is example of pre market offering on ticker VVUS:






Intraday offering



Perhaps a rare sight but a gift to the short-sellers is the intraday offering. While it is the fact that timing and anticipating intraday offering is not something that can be well planned, as there are just too many random factors to "predict it", that is not the issue by itself. The reason is that intraday offering can offer two very solid ways on how to extract value from an asset with the short position if the trader is already positioned before the offering drops, or even if trader is not yet positioned ahead of it. There are two ways to extract the value:


-If the trader is already positioned (short) shortly before the offering, the profit-taking on the short position should be highly extended and the trader should enter into high reward mode instantly (keeping fingers away from covering position). The profit target on the short position should be instantly extended towards where the offering price of the stock is or lower than the offering price. For example, if offering price is 1,00 USD the trader should extend the cover targets to 1 USD or lower (for example .80 cents). In most cases the price on intraday offering will actually drop under the offering price at least 10% in some cases even more. -The second situation is where the trader is not yet in a short position before the offering drops and can use now the opportunity to enter shortly after the ticker un-halts (in majority cases the ticker will halt once the offering is announced, for 10 minutes). In majority cases, there will be an opportunity for the trader to extract at least 2R or more, even with chasing the offering after price unhalts after a very deep drop. It might seem like extreme chasing but the data says it is not, nor does the order flow in majority cases as offerings dealt intraday are severe bearish catalysts.


Additional to the two situations above there is a third one, which is more of an anomaly, where the offering is released on the ticker that trades on abnormally high volume under hyped market. In such cases, large players might use this as an opportunity to soak all the shares when the buyers get out after offering release, in the expectation that eventually over the next days further new buyers will come and push asset higher amidst the hyped market conditions. Such examples were seen on weed stocks a few years ago or the recent coronavirus runs across many small-cap stocks. Those are exceptions where a trader should be more careful chasing the offering, or perhaps even go long for a scalp if heavy absorption with float rotation is visible.



Hunting procedure for offering:


To trade intraday offering it is very important to have either of those three conditions set up in order to extract edge (either of methods works, no need to have all three of them):


-1. Trade in the group of traders who are actively following the small cap tickers that are in play, to increase the odds that at least someone will notice the offering halt once it drops, the more eyes the better, especially for traders who trade large sample of assets every day this works very efficiently.

-2. Subscription to news site such as Benzinga or news platform which alerts you in realtime about specific news in small-cap stocks, or perhaps the news platform that allows you to specify only alert for offering the type of news, excluding all the rest of the news, to keep it organized (during the trading hours).


-3. Well-formed watchlist set every day formed from the active small-cap tickers that are in play and have the potential for intraday offering (determining it by quickly checking fillings of the company to see which of them are strapped for cash and perhaps have the ability to raise, or had been raising in the past frequently), and then setting price alerts on each of those tickers under their current price 10-20%. I find this very useful but for some traders, it might get very annoying since there are often a lot of unnecessary alerts that will trigger without actual offering being the trigger event.



What matters to determine approach on trading the offering and profit taking:



To determine how strongly should trader position into un-halt after the offering is announced or how far should take profit targets to be extended on covers there are few guides to look for. It is a combined puzzle that trader needs to think through in terms to define the actions:


-At which price per share is the offering, the lower the better.


-At which price does stock opens after initial 10 minute halt of offering announcement in news. The further away from offering price the more "meat on the bone" potentially is on the short position.


-Is stock trading on large % daily gains (50+%) from initial news before offering hit? Was there a large volume of buyers now trapped at today's high prices once the offering released? The higher the volume has traded stock at that day and the bigger the % move it made trough the day, the better as the offering will then initiate large cascade selloff of all the underwater longs who were holding long positions in negative but were not yet unsure if selling was the right to do. The more volume that is trapped above before the offering is released the better, as it provides selling fuel. Rarely do long traders feel encouraged to buy or add to the offering release.


Below is conceptual example of how to gauge few variables tied together to determine the entry approach and potential profit targets on different scenarios:





And another example of where the price opens after halt more closely and how potentially can trader gauge shorting and recycling the shares in to different scenarios:





Below are some intraday offering examples from this or previous year:



Alkido Pharma offering of 14 M shares at $1.00 per share




Akers biosciences offering of 766,667 common shares at $6.00 per share.




Astrotech corporation offering of 873,332 shares, at a purchase price of $3.75/share.




Bellerophon Therapeutics offering of 1.275 M common shares to several institutional investors at $12 per share.




Plus Therapeutics offering: 3M shares at $5.00 per share.



VIVE intraday offering below:



Example of intraday offering on AYTU, where the price dropped strongly under the actual offering per share level, one of reasons is because the price was actually very close to where the offering level was before its release.





My usual approach on intraday offerings is to short or to add to a short position instantly after the stock opens after un-halt if it meets the required conditions as described above, and then to cover and recycle shares according to the rules described above. But it is up to each trader on their own to study the performance of assets after the intraday offering, and using the variables outlined above to guide them on how to potentially shape the entry/risk approach. The majority of offerings are released in pre-market hours, while the intraday offerings are a bit rarer of a kind, but that does not mean that it is not a great setup to add into the playbook, few of those every few months can be a great addition to low risk and high reward trades.

The examples for intraday offerings on the article are specific to small-cap stocks and do not apply to large caps or a crypto sector with supply increases or coin burning as the reactions of price on those are different. However, there is also an edge that can be extracted from crypto on offerings as well as the opposite of that, the coin burning which is supply decrease process, however, both of those patterns will be explained in future articles as they require much more in-depth explanations than current examples for small-cap stocks.


One thing to note is that intraday offering is a very high win rate play and an excellent pattern to stack into playbook. A rare exception.



Wall drop play





This pattern is commonly present on small caps as well as on larger cap stocks.


On the image below is a conceptual example of variables that form wall drop setup. Conceptual example below is strictly taken for 1 Minute time frame on chart.





For edge to be extracted trader should pay attention to all the variables, this setup is not just about a trading small-cap asset that has few consecutive red candles and buying a dip. All the details matter and contribute to more than just "buying a dip".


Strong drop in % terms causes emotional sellers to get out, allowing large buyers willing to absorb at lower prices to soak up as much as possible, halt creates the time gap creating a condensed time window at which many more fresh buyers might be willing to step in, increasing the chance of bounce (many buyers stepping at the same price after un-halt), basically the halt is the key component that increases the density of positions at a similar price once the asset un-halts. The first bullish candle then additionally re-affirms to other buyers that buyers have stepped in for the first time (for those that read order flow only trough chart and not using a level 2 action). Additionally the bigger the % drop the better, however, due to how halting mechanism works it is unusual to see a drop that is larger than 50%. In most cases, it will be between 30 to 50%, depending on how quickly the price drops before the first or the second half is triggered. The required front variable is that a drop in price must not be due to news release! Wall drop play is strictly ordered flow cascade play of buyers giving up from usually multi-day under-performance of asset, and it should not be caused due to fundamental events.


Below is a conceptual example of a macro time frame (M15) on how usually the asset sets up after having several days of huge run and then a consolidation with no further push. This under-performance over few days then starts to trigger buyers into becoming sellers, especially many of beginner or emotional traders, causing the potential for wall drop liquidation.





From the practicality and trading approach perspective, it is not that important to know or follow the macro side of the asset (as the image above), it is more important that trader has the right assets on watchlist so that once the wall drop comes into play one can notice the right asset.

Without the right watchlisting procedure, the trader will eventually miss the majority of the opportunities. Using % drop scanners in charting software is also a great help, quickly sorting assets by % of a move to see what is moving. But in general, the best approach is to stack the potential assets on a watchlist that might get into play and check them here and there if the move is in play, the majority of such assets will be very strong % gainers over last 5 days, that is the most straightforward variable for a trader to track. Wall drop play is not specific only to small cap stocks, however it is the most frequent on those assets.


Additionally for traders who trader many assets at once (or many markets) using alerts on wall drop plays is highly suggested. Once asset starts to display behavior that might be the pattern it is useful to place alerts under current price in few distances (5%, 10%, 15% under price for example) so that trader can put attention on other tickers meanwhile and wait patiently until the asset really does extend enough, to fit the wall drop play requirements. On the image below is wall drop play example from ticker APT, the ticker that has run up significant % over the coronavirus hype.




The example below on ticker MRNA is the setup with 2 consecutive halts. A trader should be very patient when it comes to wall drops, it is all about asset proving confirmation of buyers, trader should not speculate or anticipate that buyers will automatically show up after halt, instead the tape and volume need to confirm it. This means that they might show up at first halt or in some cases as the MRNA ticker, on the second halt. It is a must that a very strong bullish candle on the strongest volume in the whole movie needs to "print up" before the play becomes valid. Without that, the bottom is not yet in, at least for the majority of cases.





The take profit distance is as per data going to be 30% of the whole move. This means if ticker drops 50% on the wall drop, the bounce will usually be aprox one third of that distance back up (15-20%), as the image below shows:





But keep in mind that this is only a data guide, trader should still pay attention to volume and tape to adjust the target if needed, in case if sellers are stepping up strongly indicating that target might be harder to reach. Another example of a wall drop on ticker BKD. Price accelerates towards later stages of drop and very high volume anomaly shows up with buyers absorbing the sellers and rotating price up. This example does not have a halt since the progression of the move was not quick enough, but the halt is not going to be necessarily present on all of the wall drop setups. This example had a slightly higher bounce rate of more than half of the move retraced to the upside (higher than 30% average).





Another example with 3 consecutive halts before the bottom was established. After the first and second halt there were not a lot of buyers on the tape with price following straight down. The first halt had a price drop from 2,50 to 2,00 which is still under the minimum 30% drop requirement, excluding it as entry, the second halt, however, did fit under the basic requirement, but the buyers showed up at the third halt with proper volume and the strongest bull candle in the whole move, which is ideal for entry. The bounce initially completed approx 30% of retrace from the drop, fitting within the average data performance of pattern.




Below is example of wall drop on ticker GNW, with very high volume anomaly.



For beginner traders, this pattern is not ideal to trade because it is not easy to research it historically, which makes it hard for a trader to build good memory muscles and how to react. The moves can be quite strong with excessive volatility and such setup is not an ideal playground for beginner traders as it can lead to large losses if the trader does not cut losses quickly or has the right idea on how to scale positions at the right size with higher volatile assets. This makes it a better setup for slightly more experienced traders who are patient and have a decent read on the tape to manage the entries.

The setup itself is all about waiting for buyers to show up, this is not about buying a falling knife and averaging in. It is about patiently waiting for a very clear anomaly and shift of order flow, and if the buyers do not perform with holding the entry price, cutting the position instantly is usually the right thing to do. For beginner trader willing to approach the setup, it is highly suggested NOT to use average in the entry, but just use one full-sized entry, and set hard stop. The reason is that in-wall drop it is very easy for a trader to get carried away and just start adding and adding as the price is dropping if trader uses scale in approach. It works far better on the discipline to be very patient on the entry and sharp on the exit as well. It is simply too easy for traders psychology to be twisted on strongly dropping assets that even if a trader is in red position and averaging lower and lower, at some point surely the asset has to bounce right? This is the kind of danger that averaging in approach can quickly play with the mind of trader, especially of a less experienced trader. Not that scaling / averaging in approach is not good in trading, it is just not a good fit for this pattern with traders who (by majority) are not very strict on the discipline.





After hours (AH) play






Just because the market closes it does not mean that day necessarily has to end for equity trader. Many solid opportunities on small-cap stocks will come after the market close, 16:00 NY time. After-hours play is relatively well structured in its variables and is a well-fit even for those busy with a little amount of time to trade and day job since it allows a very precise time window of when this play will show up if it does. Since the time window is very precise (2 to 15 minutes after market close) and the variables which ticker on the day have to qualify are very strict as well, there is very little wiggle room for trader left to the guessing. It is a robust setup, but its downside is that it is not very frequent, a solid complimentary play in the playbook but not frequent enough to base whole monthly performance on it as a trader. Liquidity might be a slight problem in certain cases and the trader should be careful about picking the share size on those tickers in after hours, especially if trading with large accounts. Since liquidity is a bit drier after market close and spreads can be quite jumpy (from tight to wide) it is a usually better idea to use half of the average share size of what trader is using trough the day. This, however, depends completely on what average share size trader is trading.


Conceptual example of AH play and its variables:



Below is closer look into AH play at its key time window:





Structure and variables of AH play:



-Strong move trough the day: Small cap ticker that closes up at least 50% on a day by the time market closes


-High volume traded trough the day, at minimum 10 million shares of volume


-Asset is rigged: Ticker has at least one major short trap on the day, which shows presence of rigging activity (look other articles for how to identify short traps and rigged activity)


-EOD short covers: Ticker did not give any major drops trough the day allowing short sellers to exit positions at break-even or gain through the day. This increases the chances that short sellers will be forced to cover in after-hours as they are less inclined to hold a short position on strong ticker over the night. This variable is directly related to the % of the move on the day, the stronger the move and the more balanced/consistent upward move trough day it is the better, as this does not allow short sellers that average in to get out of position with gains or break even and might still hold the position till later hours.


-Volume requirement: Once the market closes the ticker needs to display at least 25k volume candles on 1 Minute chart. Important, it has to be 1 min candles, not higher, as this variable is strictly measured on historical data from 1 Minute.


-Entry time window: Price should form a cupping consolidated structure in the first 10 minutes after close and then break it soon after. The break of the structure has to happen a maximum 20 minutes after close, if it takes longer than that, the chances for push decrease as it shows a lack of buying activity.


-Draw down: Once AH play starts to work, the price has to respond instantly with push and it must not drop under the break level of cupping structure. The majority of A-grade AH pushes will keep pushing without major drops in between.


-Target: In majority cases the move will exhaust in 2 hours, in some cases, it might last 6 hours, and in others, it might only last 1 hour or less. The data is somewhat in the middle of 1.5 hours for the majority before the price starts to drop.





Example of AH play on ticker SGBX that closed strong on a day and delivered solid AH play with strong push and no retraces.




Example of AH play on ticker AYTU, this AH push was smaller in size and was done within 1 hour after market close.




Below is an example of AH play on ticker BMRA and solid AH run. This was smaller float ticker, those usually tend to deliver better AH pushes, especially if there was the presence of large short-selling participation with strong rigging activity from market makers. Once asset closes and if market makers still hold a decent portion of liquidity, it is more likely that MMs will still hold this liquidity and dump it next day, as there is often not enough volume to do so after the market closes.





Example of AH push on ticker IMAC. Solid example of ticker that closes up over 1000% on a day and has traded with many halts trough the day, not giving shorts many chances to exit until the market finally closes and the halt activity is stopped. Cupping structure broke at around 4,75 area and delivered some push.





Below is AH play on ticker AYTU, on the consolidated price structure. Such small volatile assets of 1 dollar stocks that pack a decent amount of volume in the structure tend to have a decent chance of short squeeze once price starts to move above the highs, even if that is the case to happen in after-hours and not at market hours. Last 30 minutes before close, and 30 minutes after close is where short sellers will likely be triggered into covering, as in with many brokers they are not allowed to carry overnight or they might be unwilling to pay large commission fees to do so. This time window 30-30 increases the chance for AH push if shorts have not yet been squeezed in the midday.





Below is example of ticker TLRY and smaller AH push.





The suggestions on how to trade the AH play are merely my own approaches, by no means should trader stick to this a must. It is up to anyone else to run with this pattern, study the data and find your own entry or exit approach to better suit your personality or perhaps the performance itself.

Some traders are proponents of adding to winners, in such case AH play could be going well hand in hand, since those plays usually tend to perform with consistent push where every micro dip is bought up.


Conclusion


For any trader willing to put any of the patterns above in playbook it is required to collect large sample size of historical data for that specific play and research it, none of the words or suggestions in article should be traded on without first doing the data check by trader him/herself.




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