Here’s Why You Should Watch The Previous Day’s Low

  • February 3, 2005
  • Tsutae Kamada

So often traders place
stops just below the previous day’s low to protect their long
positions, or open new short positions. Needless to say, this is where you see
whipsaw actions.

09:53:31



Action

Symbol

Order Type

Setup

Stop

 Target

 Current Price

Posted By

Buy

HOTT

Buy stop at 19.51


Long Gap Pullback

19.37

19.75

 19.46

TK

Hot Topic Inc (HOTT) gapped
up at the open, but it immediately sold off. As you can see below, the issue
briefly violated yesterday’s low and formed a bullish long tail. It was a
potential reversal situation. We placed a buy stop at 19.51.

10:00:26

Follow up on HOTT (9:53 post)

Sell half to take 10 cents. Move stop to breakeven. 

T.Kamada

Feel free to mail me your
questions.