GameStop stocks trend following trade idea: How to play the long term trend accelerating higher

Introduction

VolatilityMarkets trend following trade

According to AQR the quantitative hedge fund and Yale University, over the past 100 years markets moved in trends. Trends are successive upwards and downwards movements in price that occur at a greater frequency than would be predicted by randomness alone. The following trade idea is a trend following trade idea which takes the assumption that the market will continue moving in the way it has over the previous sessions. Trend Trading, however is different than scalping due to the time horizon of the trade as trend following trades will take a week while scalping is done on a daily or intraday basis.

Market summary

Price

GameStop last price was $ 23.98.

Trend analysis

In the short term GameStop has been accelerating higher. In the long term GameStop has been accelerating higher.

Value analysis

Over the past 20 days, the GameStop price increased 10 days and decreased 10 days.

For every up day, there were 1.0 down days.

The average return on days where the price increased is 7.5401%.

The average return on days where the price decreased is -4.1846%.

Performance

Over the past 20 Days, the price has increased by 22.28% percent.

Over the past 20 days, the average return per day has been 1.114% percent.

Trade idea

Taking into account the long term trend accelerating higher, we propose a long trade idea with time horizon.

Trend trade idea

Buy $ 22,236 USD of GameStop, take profit at $ 25.8599 level with 25.0% odds for a $ 1,743 USD gain, stop out at $ 20.3121 with 50.0% odds for a $ 1,000 USD loss

through a one Week time horizon.

Intraday predictions

GameStop trend analysis

GameStop last price was $ 23.98. The short term trend accelerating higher is stronger than the long term trend accelerating higher. This trade goes long when the last change was higher and accelerating.

GameStop value analysis

Over the past 20 days, the GameStop price increased 10 days and decreased 10 days. For every up day, there were 1.0 down days. The average return on days where the price increased is 7.5401% The average return on days where the price decreased is -4.1846% Over the past 20 Days, the price has increased by 22.28% percent. Over the past 20 days, the average return per day has been 1.114% percent.

GameStop worst/best case scenario analysis

Within 1 week, our worst case scenario where we are 95% certain that this level won't trade for GameStop, is $ 11.0583, and the best case scenario overnight is $ 36.9017. levels outside of this range are unlikely, but still possible, to trade. We are 50% confident that $ 20.3121 could trade and that $ 25.8599 could trade. These levels are within statistical probability.

Expected range

Within 1 week, our worst case scenario where we are 95% certain that this level won't trade for GME, is $ 11.0583, and the best case scenario overnight is $ 36.9017. levels outside of this range are unlikely, but still possible, to trade.

We are 50% confident that $ 20.3121 could trade and that $ 25.8599 could trade. These levels are within statistical probability.

Probability vs payout chart

This graph contrasts the percentage payout of holding a position vs the probability that the payout occurs. The red and green columns represent the probability of stopping out and taking profit and their associated payouts.

Key Takeaways

• Price today $ 23.98.

• Over the past 20 days, the GameStop price increased 10 days and decreased 10 Days.

• For every up day, there were 1.0 down days.

• The average return on days where the price increased is 7.5401%.

• The average return on days where the price decreased is -4.1846%.

• Over the past 20 Days, the price has increased by 22.28% percent.

• Over the past 20 days, the average return per day has been 1.114% percent.

• Over the past 20 days, The price has on average been accelerating: $ 0.0584 per day higher.

• Over the last session, the price increased by $ 1.66.

• Over the last session, the price increased by 6.9224 %.

• Over the last session, the price accelerated by $ 1.41.