Why watching the Level 2 is VERY HELPFUL!

Alright, today was a little slow day on the trades side, the market was spiking buy it seemed like no stock that I liked was going with it.

BLOX was in my watch list ( its important you have one everyyy day!) as a potential earnings winner to breakout, it also had news about Entry into a Material Definitive Agreement, which were good!


I got my eye on it at 18.66 it has spiked in the morning, tested the breakout and started fading.
heres how it looked:

I was watching it for a rebound to test the breakout level again, as soon as it broke I got in at 18.81, My first stop loss was at the correct days high which was 18.77, I was on Skye with a friend who also trades (he got me into trading) and told me to set my stop at 18.6 where there is clear support, I didn't like the idea of a 0,20 cents stop but the chart looked like a 100% breakout with all the indicators pointing on it (earnings winner, holding gains, spiking at the mornings, the fact that its a Friday and could possibly squeeze shorts)

I was waiting patiently and looking at the LEVEL 2 quote, to see and feel what the chart is going to do, half and hour later the stock started spiking and broke out! I was break even and was thinking about taking it and closing the trade because the volume was only 500K but again my friend Igor Lev was in my year and I remembered all the things that point on the breakout and everything that Ive learned.

The stock kept spiking, I was WATCHING THE LEVEL 2 like a hawk, to see for any momentum change in the trend of the stock (Learned this from Tim Grittanis DVD "Trade the ticker" really recommend this one!) and slowly it got to 19.22, There was a little panic down to 19.13 and I took the profits of 0.32 cents for some reasons.

First of all The stock has gone up a dollar which I thought was a little over extended.

Second I was tired of watching it and 0.32 cents a share was not a bad profit.

Thirdly the Level 2 looked like the momentum has changed.

I think it will spike more on Monday because of the news, breakout, earnings, but I'm a scared trader and I like to take profits when I have them.



So the great lessons from toady's trade are:


1.Watching level two with stocks on low volume helps allot to maximize profits and feeling the stocks trend.


2.Control the feeling of wanting to take profits every cent it goes up because you down want less than you see, play by the chart not the feelings !




3. patience! patience was the key at this trade because of the low volume and that It was lunch time at the time I was in it.



4. Putting smart stop losses.

I usually do smart stop losses, but I had a problem with putting the correct stops on breakout plays like this, in breakout situations you should put your stop on a comfortable size that wont freak you out if you see it reach it like 0.1 cents 0.2 cents, I don't like more than that, and you should look for a key support area to be your stop to confirm the stops less risk to reach it.