VISN is a crazy penny stock that spiked up from $2.00 to $18.00 in just a few days. Although these types of stocks do not occur every day, they do occur more than you would expect. The key to trading erratic low float stocks like VISN is to have a plan and stick to it. You should not trade a stock like this unless you know what you are doing and have a trading system that you are confident will help you time your trades effectively.
When buying a stock like VISN the hardest part is usually determining if you are chasing the stock. Since a stock like this can easily move 3-5 points a day, the upside is tremendous if you can get in at the correct time and don’t overstay your welcome, even if the stock has already moved. The big reason for this is because large moves in low float stocks usually occur due to big short squeezes. Since short sellers must trade on margin, and margin calls can cause forced buying (due to requiring shorts to buy to cover), these types of stocks can move a lot further than would otherwise be possible.
I traded VISN two separate times over the last few days. The first trade was just a standard gap trade where I bought at 9.56 late day anticipating a nice gap up. This trade was good for 1 point which is typical and I sold the stock the following day for 10.51. The second trade was what I would refer to as a home run trade. I never go into a trade with the expectation of hitting a home run (in this case extracting 5.00 points out of a stock), but when you have a plan and you follow it day in and day out, eventually you will experience these type of windfall profits.
I bought the stock at 13.93 and sold the stock the next day at 17.71 These are the types of trades that can make your month! Often new traders take small positions and expect they are going to earn a huge profit on every single trade and this is just not true and never will be the case. This is why so many people fail before they have a chance to grow their account to a size where small profits can become thousands or tens of thousands of dollars.
My trading system allowed me to nearly pick the top in this stock. While I never try to pick a top (since that is foolish and risky) my system is accurate enough to allow for precise market timing again and again. It’s not difficult to determine when a stock like VISN is overextended and ready to pull back sharply or implode altogether.
One thing I know for sure is that stocks that hit my buy and sell zones almost always do what the system says they should the key is to determine if the risk profile of a given trade fits in with my own trading plan. I may know that a $300 stock should reverse 3 points, but if I can only afford to buy 10 shares given my risk profile and my account size, it would not make sense to take this trade because, after commissions and potential slippage, my profit on the trade would amount to basically nothing.
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