I’ve been day trading many opening day IPOs lately. It’s a good idea to keep a stock picks watch list of IPOs handy, to keep track of them when they’re as active as they’ve been. Day trading patterns will eventually emerge on many of them, with high success rates from my experience.
An online day trade in the stock of HMIN - Home Inns and Hotels is an example for today. I noticed TraderMike mention it, and put HMIN on my radar this morning specifically. The stock of Home Inns and Hotels seemed to drift off rather quickly after the open. I kept it on my watch list, and set an alarm just under the high of the first 5 minute bar.
The stock had a strong day yesterday, and is one that can obviously move. The alarm for HMIN soon hit, and the objective was to buy the stock on it’s new daily high. Setting a conservative stop below the day’s low of 27.49 would = R to 1.11. An aggressive tactic would be to use the low of the 5-minute breakout bar as a stop. I chose to give the stock some room though.
I always set targets for my trades beforehand to avoid emotional based decisions during the trade. I chose to sell in 1/3’s. A 1/3 would be sold at 1R, 1/3 at 2R and a pivot stop method used for the last 1/3. Actually a pivot stop method would be used for all shares.
One thing I must note though. If a breakout like this quickly stalls, I won’t hesitate to get out. The reason you day trade a breakout such as HMIN, in this case, is because it IS breaking out. If it stalls quick, something is wrong.
