After the bombings in Brussels on Tuesday morning, many stocks had panic sell-offs. I DO NOT LIKE profiting on the downside in awful event, but I don’t mind buying after sharp moves down.
Priceline (PCLN) was an example of stock that could be bought after the opening.
Many travel-related stocks looked sharply lower pre-market. How do I know that? Go to a watchlist on TOS (ThinkorSwim) , and add 2 fields…MARK and MARK CHANGE. This way I see how stocks are reacting to “events.” I had a watchlist called travel that includes the travel sites and airlines.
I noticed before the opening, that PCLN looked down at least 30 points. The key was that on a daily PCLN still looked OK. So a long trade was possible, to take advantage of the overreaction.
When I trade extremely volatile stocks, I go with a 1 minute chart to time entries. As seen in the following chart, after 2 minutes, PCLN formed a DOJI followed by a move over the high of the DOJI. That was your key to buy.
That level was about 1314. After about 10 minutes, PCLN formed a reversal candle right at ATR trailing stop resistance. The follow through candle under on the next bar was your signal to exit. The trade was good for 8 points !!!
NOTE: The key to these trades is to be incredibly disciplined with the candles. The minute the candles reverse, you have to exit the trade.