Last week’s trading ideas both proved profitable (so far) with Shearwater Group slicing through the resistance like a hot knife through butter, and Intercede Group also offering an entry and now moving towards the next resistance point. 

It’s worth mentioning that Shearwater Group announced an ABB this morning at a price of 240p. Given that the closing price was 290p this is a 17.2% discount – could the company not have done this higher? I’ve put in for this given that the current spot spread is 260-270p. Usually, placings tend to trade down to their placing price immediately as traders build in profit by shorting the equity once their allotment is confirmed. That may still be the case, and if there is no support towards the placing price I’ll dump the shares (assuming I get an allocation).

The issue with SETSqx stocks is that the Normal Market Size is low and unless you’re playing for a longer term move it’s pointless buying them as the spread will impale any scalpers.

Boohoo plc

Liquidity is not an issue with online behemoth Boohoo though. I had fun a few weeks ago trading this for scalps on the intraday, and since then it’s zoomed up over 50% from where I was playing. Clearly, this is an error of mine and an area where I need to improve. I was in a volatile stock but one swing trade would’ve brought far more profit than I made closing my positions out at the end of the day. Everything is always easier in hindsight of course, but from now on I have made a note that any stocks that are tradeable as a scalp I should attempt a swing trade from the volatility too. If I look back at many of the stocks I was trading a few weeks ago, many are also much higher and so this has cost me in terms of alpha. The market will always offer us new lessons though, and every day is always different. 

Boohoo has had a turbulent several years, with the stock selling off on high volume on a trading update in 2017. Volume kills trends, as it indicates increased activity but also indecision, and so in over two years the stock failed to make a new high. For investors, this was a long and extended drawdown, but a trader who focuses on risk management…

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