Yesterday, in the private community, we talked about Knightscope trading off the .618 Fibonacci level, a classic setup that had real potential. 📈 But, as traders, we know anything can happen—and last night, it did!
After hours, Knightscope announced a new public offering 🔗, which is a move that almost ALWAYS causes the price to drop. It’s no accident that these announcements come after hours when the market can’t immediately react. This is one of those moments that reminds us why trading is a blend of skill, preparation, and risk management.
Key Takeaways From This Setup:
1️⃣ You Can’t Predict Everything. That’s Why Stop Losses Exist.
Even the best setups can shift overnight due to news, earnings, or offerings. As traders, our job is to manage risk, not control outcomes.
📌 Stop Losses Protect You: Without one, a promising trade can turn into a major loss overnight. Always set your levels of risk tolerance—because the market doesn’t care about “what should’ve happened.”
2️⃣ The Significance of the .886 Fibonacci Level
While the .618 Fib level is a great entry point, as a pro trader, I find the .886 to be the most significant level of all.
Here’s why:
🔑 Safest Reversal Trade: Price action often respects this level more reliably than others, making it the perfect spot for reversal setups.
🔑 Key Area for Buyers: Many big players wait for the .886, meaning it’s often where real volume comes in.
🔑 Improved Risk/Reward: By waiting for this level, you often get tighter stop-loss placements and higher upside potential.
If Knightscope drops further toward the .886 level, it could create an entirely new opportunity—one I’ll be watching closely.
3️⃣ Public Offerings and Their Impact
Let’s not overlook the bigger lesson here: Public offerings often lead to sharp drops in price. Why?
⚡️ Dilution: More shares enter the market, reducing value per share.
⚡️ Timing: Companies announce these AFTER hours to avoid immediate sell-offs, but the drop usually happens at the open.
Knowing this helps us anticipate patterns and adjust our approach when trading small caps or speculative names.
The Bottom Line
Every trade is a learning opportunity. Yesterday, Knightscope looked solid, but overnight news changed the game. This is why:
✅ We use stop losses to protect capital.
✅ We respect key levels like the .886 Fibonacci for safer trades.
✅ We understand market mechanics, like how public offerings impact price.
As always, I’m here to help you navigate these challenges, learn, and grow as traders. 🧠💪
What’s Next:
I’ll be watching Knightscope closely today to see if it approaches that .886 level. If it does, there could be a new opportunity for a reversal trade—stay tuned in the group for updates.
Drop a comment if you’ve traded off Fibonacci levels before or if you’ve been caught off guard by after-hours announcements. Let’s discuss and grow together! 🚀
Trade smart. Manage risk. Stay ahead. 👊