Sympathy plays – how to trade them

In recent days we can see DRYS Company on the board. Withing 11 sessions it increased from 0.3$ to 102$. It is really unprecedented movement. For me DRYS Company was not so obvious – with volatility, spread. It is trading not up to my style. However, this movement I also used on companies, on which there was a strong movement thanks to so-called sympathy plays.

Today I will explain what sympathy plays is, based on examples from the last sessions. I will also show what tools are used to search for related companies in order to use them in our session.

What is sympathy plays?

Sympathy plays, it is trading on the sectors related company or news. Let’s imagine a situation in which companies with similar activity profile, with similar products, are publishing quarterly results. The first of them after presentation of better results than expected will pull the entire sector. There may also appear strong movements on sectors related companies, despite the fact that they didn’t publish the results yet. All this is based on our faith, emotions – not necessarily having a cause in foundations. But what does it mean for day trader? Nothing.

About two weeks ago the movement started on DRYS Company. The whole was based on announcements of Donald Trump, in relation that “he will help” in raising prices of commodities. Shipping companies associated with it launched their rockets. For them it is potentially huge opportunity for higher profits.

Personally, I always search for the main leader, who holds all the cards. In recent days it was DRYS. Within this sector, transport companies, it became for me a kind of index 🙂 Reactions to its movements were usually delayed on the rest of companies. Of course, not all could be trade perfectly.

Below I present graphs of a few companies from this sector in 1h presentation. Movements from 8 November. For most of them, there were movements on a minimum of several hundred percent!

How to search for related companies

In order to find related companies, it is possible to use the following websites. All are free, and quite easy to use. We need only time and willingness. Money won’t earn itself on the market 🙂

1. Impactopia – probably the best tool (but unfortunately, it doesn’t catch all)

2. Finance Yahoo – sectoral breakdown

3. Finviz.com – sectoral breakdown

Example of possible trading

Based on graphs presented above by me… As I mentioned, the determinant of movement was for me DRYS. I observed it for stronger stand out, automatically responding on related companies – above all on TOPS, ESEA and SHIP.

For example, I expected for increase on DRYS below the level of 92$. At the same time on SHIP there was a strong consolidation at the level of 5.45-5.65$. It was clear for me that increase below on DRYS would result in the entire sector. DRYS had the biggest impact on the market. While it made candles for a few dollars, there were fractions of seconds for good short opening on SHIP, TOPS or ESEA. Please compare the following graphs.

It is possible to say that this combination of simple technical analysis, sense of the market, as well as normally trading up to human emotions. Notice – there was no news, which ensures higher profits in all these companies.