Positioning
So what I am about to write is a general way to think about making entries in any high-Beta stock and can be applied to any set of staggered lines you want to draw on a chart (even technical analysis, RSI, etc.) This is just to get you thinking. Not a strategy to follow. I tend to buy too early a lot of the time.
Let’s look at Barinthus Biotherapeutics on one of GA’s charts.
Let’s say you port is $10000. If your port is $1,000,00 multiple this algorithm by 100.
Now, I am find having a very large percentage of any one of my accounts in one stock. But, most people prefer to not have 85% in one stock.
So let’s say you set your MAX position size to be 1/10th of your port. So in this example $1,000.
How can you enter into ($BRNS) in a way to stick to that? Well, not all stocks fall through our channel. So if my MAX position size is $1,000 I would buy small when the stock breaks or touches EM1. This way I have a position in case it bounces from there like ($ABVX) did. Let’s say I buy 1 unit (more on this in a second.) I would then expect to buy at a 13G (if date on the filing and buy are the same) or at the EM1/0 break. Here I would buy 2 units.
If the stock gets close to $1.00 I would expect the stock to dip and would but at say $0.80 three units. So this is three total entries.
Then when there is confirmation ∆Liquidity or ACC buy 5 units.
So that is a total of 10 units for a MAX position in four trades. There are 5 arrows on the chart. There is no right or wrong reason here. You just need a process.
So for ($BRNS) that means 25 shares at $4.00 (~$100.) 80 shares at ~$2.40 (~$200.) 300 shares at ~$1.00 (or lower for $300,) then 500 shares at $1.00 on ACC.
How you play between these buys depends on the event landscape. If you don’t expect news and the stock moves with volume you can take the opportunity to flip to lower costs.
Now… the tough part is when should you buy on the way up? Let’s say you only get 30% of your MAX and the stock runs should you add on the way up? That all depends on your exit. If you want to exit on an event in November then maybe?
Now this is hard to do because you may not have free cash to deploy but when your other positions move just keep track of where you need to double down in.
For protracted doldrums flipping a side position to lower costs usually works well.
As always, if you think there are spelling errors update your dictionary to the latest version. Happy speculation!
— AJ
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