Volatility

[Dow Dog]

I have been watching the behaviour of TASR for a while now although I haven't plucked up the courage to trade it yet.

It currently has an ATR in excess of US$ 4 and its daily high / low range can be anything between US$ 1 and US$ 10.

Average daily traded volume is around 5 million shares lately.

Does anybody know what creates such volatility in a stock and why this little sweetheart swings about in such a manic way ?

I am paper trading it right now with a view to trading it at some later stage if it continues to behave so wildly.

I might need a few beers to pluck up some Dutch courage though.

 

[BBB]

Interesting.

Thursday and Friday saw some nice trends on a 5 min chart, retracements would be good.

On a daily chart (position trade), I'd stay out for now.

Maybe a more conservative intraday trade however may be to keep it on your radar with an alert set should it break out the 48-68 daily range.

How are you looking to trade it - whats you're strategy DowDog?

 

[Dow Dog]

My major concern about trading this stock is having my stop blown out very soon after entry because it can move a long way very quickly. Also, I would need to be pretty sure with a fast moving stock such as this that my stop would indeed be activated at or around the required level. Here, the use of the Level 2 screen is necessary.

I am paper trading it and studying the 5 minute charts every day to see how I can get an entry with little chance of a move against me.

My testing so far shows an average move against me of 36 points ( sometimes much less and sometimes much more ) - I need to refine my entry technique in order to reduce this number.

I would prefer not to go into detail about exactly when and how I enter long or short at this stage.

There is big money to be made on this stock if you can get it right.

Get it wrong and there is big money to kiss goodbye to !!

 

[BBB]

As usual, most of the volatility is coming during the first hour. So, you may want to think about sitting on your hands in this hour. Alternatively, think of trading the first reversal after the initial opening trend. Other things you may want to look at are breakouts of previous local highs and lows. I'm not advocating this as a strategy for all markets at all times, just this one at the current time from what I can see. Maybe you are better off waiting for vol to settle as it did from Mon-Wed (during the base), with resting orders (long and short) to take you in when a breakout comes. Who knows!

Of course, the biggest decision you must make is whether to trade this at all. As you say, a lot of cash could also be lost here as well as won. Is it worth the risk? Is greed forcing you into this, or do you genuinely have a strategy with an edge for this one?

Will you be better off or more comfortable looking at other markets that are less volatile but your chances of winning are higher?

 

[Dow Dog]

I will continue to paper trade this dude for a while I think. No need to hurry.

My real reason for the post was to try and get some idea why a stock would trade in this fashion.

Like a drunken dinosaur.

 

[donaldduke]

TASR was a $1 stock last year.

There are 14 millon shares in total.
It traded 8 million shares on friday alone.

Stocks trading at $60 bucks usually have more of total oustanding
than 14million.

The stock is trading like your typical internet IPO back in 1999.

You you can expect either a secondary offering or more likely a
stock split soon, then it might calm down a bit.
A 2:1 split will double the shares outstanding and reduce the price and volatility by a half.

 

[Dow Dog]

Is that what SNDK just did ?