Day Trading: How I Day Traded The Ticker “OBLN”
Day trading is a common strategy used by investors to obtain short-term gains. On May 24, I dabbled with the ticker “OBLN,” or better known as Obalon Therapeutics, Inc. What the company does is not necessarily important in terms of day trading. What matters was the decently large amount of volume they were receiving that day, making the stock somewhat more volatile. If you are a day trader and have an idea or two about patterns, take a look at the following photo. Without me adding any lines, think about what pattern this is forming.
If you guessed a double top or a wedge, you are correct! A double top is the pattern in the first half of this chart. If you do not know what a double top is and would like to learn more about them, leave a comment below. The wedge was being formed in the second half after the double top pattern held somewhat true. The next chart that will be displayed I wrote on by hand. It will show the Potential Entry’s (PE’s) and Price Targets (PT’s) when trading both the double top and the wedge.
A double top is a bearish pattern. The main focus will be the wedge, which is what I traded. I drew trendlines with the lower trendline signifying my stop loss. I entered the trade approximately where it says “Here” on the following chart:
Ideally, while I was in this trade, I wanted the candlesticks to break the top trend line. If this occurs (which it did), the stock would have a small burst in share price. I sold 25% of my total shares at 4.53 a share. I sold the other 75% at 4.39 a share. When day trading, you must not instantly sell if the stock rallies up 5 or 10% and then dips 2 or 3%. This 2 or 3% dip is generally a result of profit takers, such as myself when I sold some shares at 4.53. In this trade specifically, I was paying close attention for the stock to rebound, but this did not happen which is why I made the crucial decision to sell the remaining 75% of my shares at 4.39. I made this decision because of the lack of volume the stock was receiving after it took a small dip. The stock proceeded to dip below 4 the next day.
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