The Russell 2000 (IWM) is a good gauge of market sentiment for small-cap, low-float stocks. Last month’s post noted that the IWM was below its 200-day average; yesterday, it moved to a new high. Quite a recovery.
During that same period, a few excellent low float stock opportunities emerged in the pre-market.
I managed to trade some, missed others entirely, and on a few, only caught a small slice of a bigger move.
At times, I held off buying for too long because the stock’s price was too close to a moving average or a significant prior high, which ultimately didn’t hold.
Additionally, there were one or two stocks with ownership structures that made me wary—on one occasion, if I had acted, it would have been the trade of the day.
Every day, I record specific lessons in my trading journal for each trade, such as whether a setup is reactive, my focus, and whether I’m reacting decisively to breakouts and recognising setups that fit my strategy.
Looking back over this period, trading was not as easy as the IWM index chart would suggest.
Nevertheless, I have incurred only a few small losses during this period, and over the last several days, my trades have been 100% winners—not too big a boast, as our account is still too small to take more than one or two trades per day.
So, I continue to wait for a setup I can fully commit to—an excellent way to trade. Even so, I have occasionally entered trades too late, which I’m now tracking and working to improve.
Looking ahead, a change to the Pattern Day Trading (PDT) rules will be a positive development for me and for those who have started small and are self-controlled, profitable traders.
The rule change is now in transition. With the change, as long as an account is above $2,000 (down from the current $25,000), it could qualify for PDT and would not be subject to a fixed capital trading requirement.
With this adjustment, small accounts can use margin or leverage to make multiple-day trades. Of course, this is great if the trader is profitable, but not so good if they are not.
Although already approved, this new PDT rule will likely not take effect with brokers until later in the year.
Slow Trader 