Netflix is a monster stock to trade. Notice how many price gaps were produced on its daily chart? (Note: A gap happens when today’s trading range is completely above or below yesterday’s trading range.)
Multiple price gaps mean very high price volatility for traders and investors because the position equity can swing violently overnight.
Therefore, Netflix is perhaps best traded with lower positional sizes. Specific trading strategies to consider include: one, buying Netflix at the bottom of an established range for a contrarian bounce; two, buying Netflix on a breakout above an established range.
An example of the latter is at $190 back in July. Another is at 240 in October.
For positional trades, I would buy the stock after a setback, preferably near an established floor. This skews the risk-reward ratio in favour of buyers.
Lastly, when Netflix is trending, and you are on the right side, stay in to maximise the gains.
Jackson is a core part of the editorial team at GoodMoneyGuide.com.
With over 15 years industry experience as a financial analyst, he brings a wealth of knowledge and expertise to our content and readers.
Previously Jackson was the director of Stockcube Research as Head of Investors Intelligence. This pivotal role involved providing market timing advice and research to some of the world’s largest institutions and hedge funds.
Jackson brings a huge amount of expertise in areas as diverse as global macroeconomic investment strategy, statistical backtesting, asset allocation, and cross-asset research.
Jackson has a PhD in Finance from Durham University and has authored nearly 200 articles for GoodMoneyGuide.com.
