I haven't seen much chatter about XBIT. Probably because I am not in the chatroom. But, I think XBIT is a perfect example as to why this "crazy, unpredictable niche" works. Just 10 days ago XBIT went from 7 a share to 10 a share on some news for colorectal phase 3 studies. It held it's gains for the most part of the pass 10 days then Friday hits.. Devastation happens. XBIT releases news that they're discontinuing their phase 3 studies and how does the stock react? Well it goes from a high of 9.77 to a low of 2.77 all in one day! If this stock doesn't make people realize that the strategies we are all being taught truly work and even if every play isn't a homerun, we aren't being trapped in stocks like this. For people with small accounts, could you imagine losing 7 dollars a share? Not only would that wipe out most of our accounts, it would devastate our confidence. I checked out some posts on Yahoo Finance from people who bought XBIT in the high 9s and have held it this whole time. Some of these misinformed people still believe the stock is undervalued and has a target price of 25 a share!! While they live in their fairy tales and keep on telling themselves that the stock is worth it, most of us understand that there is more than likely more money to be made on the way down than hoping it goes back up. This is also the perfect example to cut losses quickly and don't get greedy! When a stock goes against you, get out. You don't know if the stock will only drop .50 cents off your position or 7 dollars in one day off your position. More importantly, if you see a stock plummeting like this, don't be one of those people who believe the stock is undervalued and is somehow going to miraculously jump up over 20 dollars a share. Exit your position, don't get attached to the stock. If the stock comes back in play, then you're more than allowed to jump back in it.
Always beware of these companies, never trust them. This can happen to any stock that you play in, everything can look all great for a couple of days and the stock can be pumped up to be the next MSFT. One bad press release and the stock can destroy your account. We are traders, not investors! I really wish the best for everyone that held onto XBIT. I hope it's a tough lesson learned for them and they don't make the same mistake again. For everyone who didn't trade it, learn everything that you can from this stock. For everyone who was able to short it, congratulations!!
Good luck tomorrow morning, prepare today/tonight.