Can You Trade Higher Priced Stocks

by | Sep 12, 2026 | Chart of the Week

Position Size Controls Planned Trade Risk - Day Trader Pattern PDT Rule Tip Below

Yes. A higher-priced stock can be traded responsibly when you have sufficient buying power and determine the risk before entering. The Master Trader Technical Strategies (MTS) process begins with a quality technical setup and a chart-based stop. Your account size and maximum risk then determine the number of shares—not the other way around.

Let’s review the process with the stock Bloom Energy (BE)

The MTS Decision Process

  • Technical setup. Identify a high-quality pattern within the trend, support and resistance, multiple time frames, and the broader market and sector environment.
  • Entry and stop. Use the chart to define the trigger and the price that invalidates the setup. Do not move the stop artificially closer just to buy more shares.
  • Risk per share. Subtract the stop price from the planned entry price for a long trade.
  • Position size. Divide the maximum dollars you are willing to risk by the risk per share, then round down to a whole number of shares.

    • Reading the BE Setup Through MTS

  • Bottoming process. BE spent several months building a base. That process created the foundation for a potential change in trend, but the base alone was not an entry signal.
  • Power move. Price broke above prior pivot highs and the key moving averages with wide-range bullish bars. The moving averages support the analysis, but price action and the breakout provide the primary evidence.
  • Continuation. After the power move, price paused near the highs instead of retracing deeply. This is constructive, but the continuation remains unconfirmed until price clears the trigger.
  • Trigger and invalidation. A move above $283.83 confirms the breakout from the pause. A practical trigger is $283.85. The protective stop is placed below the turn low at $256.98, allowing slight leeway below $257.01.

    • MTS confirmation checklist. Before entry, also review the weekly chart, nearby overhead resistance, the relevant sector and broader market, liquidity, and scheduled earnings or company news. One daily chart should not be used in isolation.

    Invest and Trade Like a Professional - Master Trader Education - The Labor50 Coupon Code is Live Through Monday - Individual Course and Annual Memberships.

    Position Size Calculation

    Assume a $30,000 account and a maximum planned risk of 1%, or $300, for this example. The percentage is illustrative; each trader must choose a risk level appropriate for the account, experience, and strategy.

    Item

    Amount

    Calculation or meaning

    Account size

    $30,000

    Example account

    Maximum risk

    $300

    1% of the example account

    Entry

    $283.85

    Slightly above the $283.83 trigger

    Stop

    $256.98

    Slightly below the $257.01 turn low

    Risk per share

    $26.87

    $283.85 − $256.98

    Maximum whole shares

    11

    Floor of $300 ÷ $26.87

    Planned risk at 11 shares

    $295.57

    11 × $26.87

    Capital required at entry

    $3,122.35

    11 × $283.85, before costs

    If you prefer an even 10-share position, the planned risk is $268.70—not $300—and the capital required is $2,838.50. The stock’s price determines the capital needed to buy the shares; the distance from entry to stop determines the planned risk.

    Managing the Position With MTS

  • Initial risk. Enter the protective stop when the position is opened. The calculated risk is an estimate; gaps, slippage, and transaction costs can cause the actual loss to exceed it.
  • One R objective. The initial risk is $26.87 per share, so a 1R advance from $283.85 is $310.72. At that point, consider taking partial profits.
  • Stop adjustment. Moving the remainder to breakeven is one defensive choice, but it should not be automatic if normal price movement would likely trigger it. Use bar-by-bar analysis, a new pivot low, or advancing support to determine whether the stop can be raised without abandoning the technical logic.
  • Ongoing control. Never add shares merely because price declines. Add only if the chart presents a planned setup and the combined position remains within the predetermined account risk.

    • The central lesson. You do not control risk by avoiding higher-priced stocks. You control it by selecting a technically valid entry and stop, calculating the correct share size, and managing the trade consistently.

    Build the Complete Skill Set

    Master Trader Technical Strategies courses teach you how to evaluate price action objectively through trends, pivots, support and resistance, multiple time frames, wide-range bars, moving averages, and bar-by-bar analysis.

    The Advanced Position and Money Management course connects that technical analysis to account risk, position sizing, trade management, and consistent decision-making.

    Together, these courses help traders move beyond finding a chart pattern. They teach the complete thought process—from recognizing the opportunity to controlling risk and managing the position.

    Explore Master Trader courses and education: mastertrader.com/trading-education/

    Buying Power Matters Too - Pattern Day Trader Rule 

    The $3,122.35 is the position value, not necessarily the amount of cash required. Under FINRA’s new intraday margin framework, the $25,000 Pattern Day Trader minimum is being eliminated.

    Once implemented by the broker, eligible stocks may receive approximately 4:1 intraday buying power, so this position could use about $780.59 of margin capacity. Brokers can impose higher requirements and have until October 20, 2027, to adopt the new rules. FINRA

    If held overnight, the position generally requires 50% margin, or approximately $1,561.18. Leverage reduces the buying power used, but it does not reduce trade risk: 11 shares still have approximately $295.57 at risk to the stop. Additional trades should be taken only when the combined open risk remains within the trader’s predetermined account-risk limit.

    If you have found this post helpful, Share it Forward with other Traders. All the best Greg Capra

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