Hey guys! Hope everyone had a good week of trading and if not then hopefully you learned something new!
I am closing this week out with a small profit of $44 between my two trades on $HMNY and $VUZI. In this post though I wanted to talk about my $VUZI trade today and what I learned and can now improve on.
In the picture I attached shows my $VUZI trade so that you can all see what I did and if you have any suggestions feel free to leave any :)
You can also go look at my trade to see my comments but what I was wanting to do going into the trade was to buy on a dip and look for this to retest the day highs and get a breakout into the close. Ideally hold o/n unless the stock just went crazy and would sell for safe profits.
So to start this off I found this stock being mentioned in the chat room. Once I looked at the chart and did my research I found out that this would be a good over the weekend hold because of a few reasons. 1) This stock has a 18M float but has 3M shares short. 2) This had a good catalyst + approaching the multi month b/o over $7.25.
Below is the chart at which I was seeing before I bought it. The stock had already spiked up to $7.45 and has come off the highs, making higher lows into the afternoon. Each dip people are trying to get into this stock before the weekend as they see the news. I bought at $7.25 when it looked to have support at $7.20. I did try to buy at $7.20, however, executions were tough since this is part of the $.05 tick program. I'm not a huge fan of this since my risk would get hit quicker since the stock can move pretty quick going $.05 at a time. I set my risk at $7.15 which is that previous dip level and was in with 250 shares. Not that bad of a dip buy but now looking back at the trade I feel I may have gone too aggressive on my size and risking so small, not giving it enough room to consolidate if need be. My whole idea of entering this trade was thinking that this catalyst could help it spike over the weekend but that there were only 2.6M volume at my time of entering and there was no way all 3M shorts, let alone 500K of the 3M covered into this run up. If the stock ran big over the weekend then I could have expected a big squeeze from all those shorts.
The picture below is when I sold the stock. $VUZI was doing well for a bit before facing some hard resistance at $7.40 and the stock came down pretty hard. $7.20 support didn't hold and when it hit $7.15 I sold instantly.
Now towards the end of the day the stock had managed to get back up and breakout past the day highs; like I had initially thought this stock could do. I wish I would have stuck to my plan and holding until the close to see what this stock could do but it hit my risk and knew that if this went against me I would have felt worse. I am doing a good job setting plans for stocks but seem to hit my risk before I can let the stocks do something.
So my lessons I learned from this are...
1) To lower my size so that I can set a wider risk, giving the stock more room to move.
2) Proving that I was on the right track regardless of the profit or loss.
3) Control my emotions and be patient for the right pull back that makes me comfortable and not raising my limit just to get filled.
I feel confident in what I have learned over the years and all the DVD/video lessons I have watched and just need to have that confidence in myself to get in a trade. I know as I see the patterns which are good R:R but sometimes don't pull the trigger and watch. I think just seeing them go by will make me just take that step to take the trades but until then will keep studying hard!
Thank you everyone for reading this and I hope it may help you in some way. Have a great weekend!