This post is a long time coming. This post is about my first half of this year and how I made my three biggest plays with $LBCC, $AMRH, and $LFIN totaling over $30000.
Sector Momentum - Knowing when a sector is on fire is extremely Important. If you can catch breaking news for a company within a very hot sector then you can get some incredible entry's.
When $LFIN and $RCGR announced they were investing in blockchain technology their prices soared higher than anyone has seen in a while. 1000%+ in a day for each of them. $LFIN IPO'd at 5$, announced it purchased a Blockchain company with it's own coin a day later and made it as high as $150. $RCGR went from .02c to 1.50 in a matter of minutes. $RCGR being the strangest, a cigar company getting into the blockchain industry seemed ludicrous but it ran anyway.
Cryptocurrencies were hot. Like extremely hot end of last year, people who don't even invest were trying to convince me to buy bitcoin or etherium or any other coin they believed was the next big thing. Bitcoin was breaking new highs at 19k a coin. The whole world was focused on this new big investment opportunity. So when i saw $LFIN and $RCGR skyrocket after any sort of blockchain/coin news i knew it was time to pay attention.
Enter $LTEA and $AMRH - I am mostly short biased but sector momentum cannot be ignored. I was up at 2am (Hawaii Time) looking for the next big blockchain/coin play. On Etrade i was watching the news stream, unfiltered trying to pick out a headline that really stood out. I read $LTEA changes name to Long Blockchain Corporation $LBCC. I was still nervous just buying news so once i saw some volume come in I only took a small position of 1k shares at $5. Little did I know that within 30 min the stock climbed pre-market to $15 a share and I made the biggest trade of my life selling at $13. The very next week, I saw blockchain news for $AMRH, It didnt climb as fast but also skyrocketed from $5 to about $15 in a couple hours. This time I had more confidence and bought 2k shares but i was overconfident thinking it would climb more, so my exit was much worse only making 4k. It was an excellent start to the new year, wiping away all of my losses and profiting quite nicely.
The fact that it climbed slower and crashed faster tipped me off that this type of news might be on it's last legs and I switched to being short biased, shorting into spikes off these types of moves.
Full of overconfidence, I began searching for the next big blockchain mover to crash. $KODK and other runners were well of their highs, bitcoin started crashing and all the former runners were ripe for short sellers to start banking. I took a few positions for decent 1k profits, but then i saw the king of the crop. $LFIN. Ran from 5$ to 150$ in a few days last year after its IPO.
$LFIN - a little research would uncover that the company had essentially no money and it's SEC filings were full of inaccuracies and misstatements. The float was undetermined, considering they reported only selling 1.7 million shares to friends of the CEO when it had its IPO. But all the finance sites for some reason thought it had over 30 million. All of its SEC filings were super sketch, the office was in a strip mall, seeking alpha bloggers had endless evidence that their was nothing good about this company. I used Michael Goodes videos to help me do research on the filings to verify what I was reading from random posters across the web. They offered a coin on their website claiming it has value when in fact you could not have purchased the coin even if you wanted to. Complete sham of a company. So when it finally cracked under it's key support level at $30 dollars I knew it still had a long way to go down so naturally I shorted it.... at ~$30.
This was still a NASDAQ traded company that you were able to get options for. The rest of the world was unaware to how scummy this company was. So what happened next blew my mind and taught me a very important lesson. Without a catalyst, some scams could continue to trade at inflated levels without anyone being the wiser. And not to enter a position when you wont have internet in the caribbean for a week. And cutting losses early continue to be the cornerstone of any successful trader. It's Sykes #1 rule and anyone else you ask i'm sure it is theirs too.
I came back from vacation to the shock that it ran from $30- $60 dollars while i've been gone. The Russell 2k decided to include them in their index.... I was speechless, i could not believe that the system could be so oblivious to what was clearly the biggest sham of the century. Zacks investment even put a buy alert in my email for $LFIN when it hit 65$, (i had a free trial just to see if they would promote LFIN). To be clear i had 1k shares short. I was down 30K with a margin call on my account, i had to bring in my savings to hold the position b/c at that point, it was all or nothing. I averaged up my position by getting a few more shares short at 60, and for the first time buying PUT options with a $22.50 strike price. I could feel with everything out there that the company would be exposed any day now. At the same time I am sweating bullets.
That monday, Citron Research tweeted that LFIN is a complete sham and anyone would be lucky enough to find shares to short. Within 2 days it was down to 9$ and i profited ~18k dollars. BUT holding my short position cost me 6k! over the last month. I tried dip buying taking a 1k loss and i tried to get more puts on it after it bounced only for NASDAQ to halt the stock for 2 Months!!! trading on the grey sheets the day after my options expired, coincidence? i think not. I invested 10k in put options, and etrade would not allow me to exercise them during the halt saying i did not have enough capital. So in the end after all the fees i think i ended up with only $100 profit for LFIN, but came out knowing so much more about market manipulation on both sides. Nasdaq and scum companies like LFIN.
I took a break after all of that craziness and now i'm back, weed momentum is back, not sure for how long but i'll be looking for some promising plays. Sticking with the core moves;
First Red Day
First Green Day
Spikes into Heavy Resistance
Be safe out there everyone and remember, CUT LOSSES EARLY.