This chart is a good example of what we are looking for when using the scanner. See the large fat fingered drop here? This is probably a single seller dumping his or her position, this sudden influx caused the price to drop so quickly that the market barely had time to react. If you bought, you would be selling some of your position at around the 50% retracement, this would assure that your unlikely to take an accidental loss in the event our assumption that the market will return to normal is wrong. I would have probably gotten around 15-25% ROI on this quick trade, and be out of my position within a matter of minutes. Note that I am still using a 1 hour chart, the only reason why we might switch to a 5 minute chart is to verify our assumptions about the dump, clearly this was not a panic - the market was expected to rebound no matter how low the price went = great opportunity to pick up a few quick bucks!
You are viewing a single comment's thread from: