I may consider placing a buy stop around the $1.75 area, as I think a breakthrough there could be favourable.
Also, readers of this blog may notice that I rarely buy stocks under $5.00. The only reason this is true is because my broker requires more margin for such positions. To me, margin is a precious resource, and I dislike stocks that absorb excess amounts of it.
One advantage, however, of a lot of these low priced Canadian stocks is that they are uncorrelated with the general market. For example, if the Dow drops 300 points on Monday, this stock may not necessary fall. This is a major advantage, in my opinion, and another reason why I would like to have this stocks as a part of my mix.
Anyway, regardless of whether the stock is $1.00 or $1000.00, the rules apply just the same. A purchase of this stock would have me place a stop at 2x the ATR below the price of execution (so about 28 cents below entry in all likelihood). I would, like always, have no profit target, and only sell if the stock broke its 50dma, or the hard stop was hit, whichever came first.
