Today's trading consisted of $NVCN witch was almost a textbook gap and crap set up, upon the hyped news, terrible long-term chart with massive amounts of bagholders and a big pre-market gap up.
I early on mad the decision to basically take this off my screen to keep myself from not trading it in the pre-market as I quickly realized that I had no edge there. My ideal plan was that this was going to spike at market open to either double top at the high's of pre-market or go above it and then very quickly stall out.
but as you can see that didn't turn out to be the case. instead, we basically started to fade right of, but I told myself not to just sit by the sidelines and watch this play out just because it didn't go as my ideal thought process. Instead, I told myself to wait for a real confirmation that the momentum had really shifted because in the beginning the fade wasn't that powerful and could easily have been just a washout. But then as the fade got more severe and really indicated that this was cracking I decided to add on my first starter.
Why I decided to add a starter here and not my full size was still due to the fact that I thought that this could still have a risk of being just a bigger washout, and I also have noticed that the first "mini" bounce after a big drop either turns out just like a "mini" bounce or it basically turns out to a squeeze up. and at this point, my risk was going to be that opening price, so the risk was basically too big in terms of % for me to be comfortable taking on any size.
Then as we got the second confirmation I started to get more comfortable as my thesis turned out correctly. I then added on some size (which wasn't really any size), and had the criteria that if this were to bounce above that first mini bounce rejection, I where to cut the shares that I just added. because the whole add was based around the thesis that the breakdown was now confirmed, and if we were to bounce above that first rejection that thesis would no longer be intact, and therefore those shares shouldn't be part of my position anymore.
Then I basically had the idea of covering into washouts and near pre-market support levels, and that turned out to be exactly what I did. Covered my first 1/3 at the $3.3 level as this had been a small support level in pre-market, also covered a second 1/3 just briefly afterward as I got a bit impatient and just wanted to lock in my profit's. And my last cover I basically diced to take as I thought that the stock had already come down enough for this to be the potential bottom area, and when the stock started to defend the $3.2 level I saw that as another confirmation to my cover thesis. and also something that's worth mentioning was that I was somewhat stressed about locking in profits as I knew that my personal schedule wouldn't allow me to trade until any later than 1 PM, and I didn't want to risk sitting through midday and being in a stock that just grinds sideways and then as 1 pm comes I have to cut it. because within my experience if you have a thesis that the stock has more room to come down and your getting past that 10 AM you're going to be willing to sit through all of the midday lul before you can expect to get any sort of confirmation. and this day I didn't have the time to potentially to do that.
But as I looking back at the chart I see that I have the opportunity to work on my patience with these plays, and not being afraid to add more along the way. Because this is a really solid trade setup, and especially these last couple of days it has shown that the market really valuates this strategy of gap and craps.
Things that I did well:
Understanding the impact of stress - The fact that I understood that I wasn't comfortable holding through the potential midday lull, due to my personal schedule stressing me, was one of the greatest things that I did in this trade. It's so important not to be stressed when you trade, because if you're stressed you'll tend to make irrational decisions and to start for a thesis that might not reflect the actual reality. Just as I did in my pre-market trade on $IZEA when I got a bad entry, this stressed me and I started to see the chart from a totally different perspective which was totally not reflecting what was actually going on. my mind just blinded me and saw dangerous because I was stressed.
Executing - The fact that I executed this trade is a big step forward. In the past, I've struggled with executing my plans for potential trades. And the fact that I executed the trade even though it didn't play out as the ideal scenario that I had visualized, is a big step forward. Because in the past this has many times lead me to just freeze and say "it didn't do as I expected, so I didn't trade it" even though the setup is still very solid and offers great risk/reward. But today I understood that this was still a valid setup even though it didn't spike at open as I was wanting it to do.
Waiting for confirmation/being comfortable - That I waited for the chart to tell me what to do was also a great thing that I did in this trade and something that I will take with me until the next trade. And the fact that I let the chart tell me what was going on this kept me comfortable with my position and my adds.
Things that I can improve on:
not locating shares before the open - I was so excited about this play that I tried being a smart ass and locating shares before the open just to saw in a couple of $ on the locat fees. But $NVCN really reminded me of why you should never locate shares before you need them (unless it's a low float), because this dropped from up 90% in pre-market to 60% in just minutes, or look at $ALT the other day, had an offering, total waste of money on locate fees if you're not able to play the stock..
be more patient - I'm going to work on being more patient with the plays that I pick, as I have seen a tendency that I just want to run away as soon I'm "in the money" which is a behavior that I'm going to work on changing. Because this behavior makes me see the chart differently, just as I talked about stress makes you see the chart differently. this behavior is no different from that.
Monthly goal: "believe in your own pick-rating, and execute the trades"
motivation: I get an (A) on the monthly goal as I executed the trade that I believed in even though it didn't go as I had visualized it to go. This has in the past made me paralyze, so the fact that I saw that there was still a great opportunity even though the stock didn't spike makes this a clear (A) grade.