SS 150 $7,47 9:37
SS 100 $7,08 9:42
C 100 $7,33 8:42
C 150 $7,9 9:47
SS 100 $7,37 9:57
C 100 $7,26 10:01
Overview/ main process:
after a week of multiple failed gap up’s that all had prevented nice morning spikes and then just fade of all day I thought $PTI wouldn’t be any different, but I was soon taught I was wrong, and secondly a very important lesson.
The first mistake that I made with this trade came across as I had determent to use statistics that I had tracked on the other similar plays to try to predict where the top was going to be at. The biggest mistake/ fault with this thinking was that I was trying to PREDICT and not REACT. Secondly, I relied upon statistics that was and still is way of from having enough data to be reliable. And that’s basically the short answer to why I totally deserve this loss.
I simply traded the stock as if the statistics were the law of gravity, I totally put my faith in it, and at that time the statistics showed that the top was usually in at 20-30% above the opening price, and I, therefore, traded accordingly. As you can see at the picture I tried shorting in the 20% area but was fast to cut it as I knew I couldn’t hold on from here as the potential run range up to 30% was too big.
But then as we spiked up and I thought it looked toppy on the tape, which in hindsight was going of way to fast for me to even understand what was going on I re-entered with the risk of that 30% area. And pretty quickly I was proven wrong once more so I simply cut the trade.
Then the stock rejected just minutes after I’ve covered up, and now I saw this as a confirmation that this was toast, but then as I started to look at what the stock had done and how it had come up to the level as we where I saw that I was still not right with my thesis, so I cut the trade once more.
Because what I saw was the fact that the run-up that I was caught in the first trade was simply a short squeeze that then consolidated and managed to squeeze even higher, and that the area I was in now simply was a pullback and nothing game changing to the short side.
And as I conclude that the run-up was created by a short squeeze I simply stayed away from it the rest of the day. Because 1. I had already been hit with some bad trades so I was quite exhausted mentally, as these trades was no easy stress-free trades. 2. I felt that I didn’t know what I was doing/dealing with as I don’t have much experience with short squeezes. And lastly 3. I feel that I had absolutely no edge against the majority and that I wouldn’t be comfortable with any plan that I threw at this stock due to this manner.
Things that I did well:
Cutting losses – The fact that I always swallow my pride when it comes to cutting losses when I’m wrong is a key thing that I have to give myself props for doing. Because this trade could have gone so much worse if I hadn’t stayed disciplined.
Having a plan – even though my plan wasn’t the best as it was totally based upon really un-valid bases I still have to give me credit for being disciplined to always have a plan.
Taking a step back – Also something else that I have to give myself creed for is the fact that I zoomed out and looked at how we had ended up in the area where I decided to take on my third trade, and realizing that this wasn’t a good area to short at and therefore simply cutting it. Also, the fact that I then understood that I had no edge, I was mentally fired, and I wasn’t comfortable trading this ticker and therefore decided to not look back at the ticker is also a behavior that I should really take with me into the next potential trades.
Things that I will improve upon:
Reacting, not predicting + stress-free trades – The main lesson that I take with me from this trade is the fact that I will no longer try to predict where the top of a play is, I rather wait for a confirmation and take the easy money and the less stressed trade. Because in the end what’s most important is how comfortable you are with a setup since this will totally determine how big size your willing to take on.