I've been watching more than trading this week, and that's fine. I just subscribed to Pennystocking Silver and I'm soaking up the Zeitgeist of the chatroom. On the plus side, I was alerted to $SRAX earlier this week whch more than paid for this month's Silver subscription. On the downside, a lot of the information given out is a bit dubious. "<STOCK> is breaking out! NHOD!" and then you go look and they're right, it's got a new HOD.. but the stock has moved a whole nickel the past hour and is already back to the original level. Let's face it, I'm really only interested, at least for now, stocks that have a 20-50 cent upside. These literal nickel and dime plays, well, there's just no margin of error for such a tiny amount. I'm sure it makes sense when you're playing with 10,000 shares and a 10 swing is a thousand bucks, but at 100 shares, not so much.
This morning, $ENRJ was on everyone's scanner. It was up big, over 100% on premarket news of a reverse merger. Of course it has potential to spike. It's Friday, shorts get squeezed, boom, you're up 50-80 cents/share in about 5 minutes. It's a fantasy we all have, right? Pre-market, I used STT's Oracle feature and saw it had resistance of .79 and mentally, that's around where i put my buy potential: If it breaks resistance, perhaps it can run? It has a shot at .90, then a dollar. Of course, it stalls the first few minutes, with high volume, but that's a good thing: it can get ready to run. Here's where I should've bought, in retrospect, since these morning spikers have seemingly returned to a one and done sort of deal that doesn't work well with my wait for the first pullback/consolidation and buy on resumption of uptick ($ADHD had one spike and then spent the day taking a dump yesterday, for example). So, it rapidly ascends and breaks .80 and hovers in the .80-.82 level for a brief moment, bingo! I go ahead and buy, and this time i buy 1000 shares. I think this is my biggest position yet. I risk .65, which is where it consolidated at the open, and this ended up being my downfall.
So of course I bought the top. It dropped to mid-70s, had a brief revisit to .85. I didn't sell because I thought it was bouncing and ready to go on a run: "I knew I should have waited for the dip!" I thought, but it would've done me no good because at most that was nickel run: I was gunning for .90-.95 at this point and set my limit sell accordingly. No such luck.
So let's talk about that .65. That's basically 15 cents risk on .80, but I got in at .82ish, so .17. That doesn't look like a large number until you realize that's basically 20%. Holy shit I did my math wrong; I fail at Asian. Seriously, though, despite being the stereotypical straight A kid in high school (well, until I discovered BBSes), math was my worst subject and I only made it through the undergrad sequence in mathematics, enough to get through compsci, in college because I'm just not as smart as the other kids. But I should have been able to realize .65 was ridiculous; I think .75 or even .77 would've been a much better risk point and still would have given me plenty of time to give my plan to work. Not based on a level, mind you, but based on about 10% risk. 10% vs 10-20% on my goal, giving me a 2:1, and that still sucks. Had I bothered to realize that, it would've been a no trade unless it really gave me a good reason to go with it. Prove it to me.
It heartens me to see Tim also was watching this and he got in early early early compared to me, and got out with a dime/share. Which sounds crappy until the math kicks in and I realize he got almost 10% on his trade, which ain't bad at all. I just didn't like his entry point because the stock had yet to give me the signal for my own buy.
So I come away with this from 2 lessons:
1) I could just wait for the dip. I would've been in around .75, and even with a risk of .65, that's more manageable than .82->.65. And it did hit .85 once, so I probably could've eeked out 7 or 8 cents. But that's not really that interesting to me when we think about it.
2) Think about my risk level a bit more. Even if I had stuck with .79 resistance, .65 was just waaay too far out of reach. What was I hoping for? Short squeeze to $3? Let's get real. I should put my stop around .75 at that level. Just 5 or 6 cents/share. I think I was spooked from $NEOT the other day and wanted to let the pattern play out longer, but in this case, I really should have protected myself better. C'est la vie. No reward comes without risk, but maybe I really should wear a condom because that girl looks a little too user friendly...
Plan: D - learned to stick with my "wait for dip/consolidate and decide if I want to buy" is better than using a resistance level from STT Oracle (at this time. I really need to dig into what Oracle is actually showing me. Maybe it's the signal that I should be watching?.. I think that number actually was showing around .70 and that's around where Tim bought, selling off right above resistance. Which makes all kinds of sense now.)
Execution: C - still tried to hit it out of the park with 1000 shares. No, dummy, 100-200 shares. Yeah, small reward, but for a new "strategy" component of using a tool you're not sure how to use that ups your risk, keep it small. You have plenty of time to make all the monies.
Weekly Thought: The day isn't done yet, I still have 2 day trades on my smaller account, but I'm pretty confident that I'm done for the week. I'm down about $200, worst week in what feels like a long time. $TEUM was a dumb trade to begin with, $NEOT was a good plan, but I was early, I missed out on $ADHD because I overslept and I couldn't get my research done and didn't want to FOMO (I was still trying to find a catalyst. Seriously, got to my computer 2 minutes before the bell), and even though my "instinct" was right, I just held off. BTW, that really reminds me of $ENRJ: both had a stall out of the gate before they went on their short runs. Neither were huge dollar gainers.
It's now earnings season and I need to get my earnings learning on to hopefully take advantage of things. It really does seem we're getting done with early morning spikes running a dollar or more, and I shall have to adjust my expectations for 10-20 cents and out. Or maybe I just started trading during a really anomalous period where 60-80 cent runs in the morning was the "norm", but out of character for the market. Set expectations lower right now until the market can prove me wrong? 200 shares at 10 cents is still $20 ($10 after fees). The problem is if I'm expecting 10 cents, I can only risk, what, 2-3 cents? And these low float volatile stocks can swing 2-3 cents a hundred times in a minute. :/ I'm still learning. That million won't make itself, but I also won't make it if I keep throwing money back to the market.
Manage Risk. Protect Profits. Trade small for now.
Now, maybe we'll get some afternoon news on something big and I can go into the weekend a little less pained.
This is what I think of when I see charts slowly eating my profits away.
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