Early morning, reserved shares in 3 hard-to-borrow stocks, all multi-day runners, COIN, WSCI and REED. Since I typically do better with low priced stocks, I focused all my attention squarely on REED…mistake #1 (today’s only its 2nd big up day, not 3rd or 4th when its infinitely more likely to run out of steam) WSCI and COIN both took nice morning dips (though neither ideal WSCI just made a massive cup and handle and COIN, well, it’s COIN, enough said)…missed ‘em both since my 3 screen monitor busted and I’m on a laptop
TIM Lesson: Either use multiple trading screens miss simultaneous opportunities, the more screens the better…up to a point
In the first hour of trading, I considered shorting at $3.89—solid big sell orders padding me above—but all the trades were buys and a morning squeeze was possible…10 min later the squeeze was on and once it took out $4, it went straight to $4.50…I thought $4.50 would hold (yesterdays high) so I shorted 1,000 at $4.39 with the goal of buying into a quick reversal around $4.
But $4.50 didn’t hold and as it went to $4.60, then $4.70, I was annoyed but not angry nor concerned…this is a true POS stock with lots of bitter shareholders (as evidenced by yesterday $1 drop off its highs) so if it kept going, I’d just double up…but over the next few hours, big sell orders padded $4.40-$4.50, only thing stopping a big drop were some buy orders at $4.30…gradually those got taken out and when it was $4.07 x $4.10, buyers quickly ate shares up at $4.08, so I thought about covering…but my greedy little Jew mind said no, that’d only be $270-ish profit after commissions, not gonna take me over $17k. I’d wait to cover this time around—to get some big profits under $4
TIM Lesson: With these illiquid little things, you gotta take your profits and run, the spread alone can kill you not to mention the risk of any squeeze
Wrong wrong wrong wrong wrong way to think about it. You think REED cares whether I get over $17k, no, you take your 7% profit and move on. Idiot. I deserved to lose on this trade, only an idiot listens to ego over price action…bounce back up to $4.30-ish but I knew I’d have another shot at covering low…so I put my limit at $4.11—unfortunately showing 1,000 shares to buy right above a proven buyer just attracts more buyers (one advantage of having a non-online discount broker is you can mask your orders, showing only a fraction of the true amount)—and didn’t get it as other buyers came in at $4.12, and $4.13.
It bounced to $4.40, dropped again, but I still didn’t get my cover, frustratingly so, welcome to illiquid stocks…bounced again, buyers look determined so I tried covering half at $4.35, got 400 executed, saved 600…reduced my risk…still plenty of big sellers all between $4.40-$4.50…with my remaining shares, I was perfectly willing to risk a $60 loss (600 shares x worst case $4.50 exit minus my $4.39 entry) to risk it not breaking out and me covering at $4.11 (which would be $170 gain). After all, surprising strength aside, the buyers on the bid were few and far between, if we took out one, it’d drop 10 cents, one more, another 10…also helped that tomorrow would be the third day of the runup, aka very tough to stay green.
Less than 1,000 shares traded later, the bid dropped from $4.35 to $4.14—signaling the strength was temporary. Still couldn’t cover on the bid, buyers in the teens look steady so I covered at $4.26, $65 total gain…not a bad trade, with all the big blocks protecting above, I’d either make a little or a lot, made a little.
Stock finished with even more surprising strength in the $4.40 range, methinks / mehopes we get another squeeze tomorrow…same strategy, maybe even buy some on strength first and then turn around and flip it, we’ll see, price action not ego based trading, remember, remember or your account will be dismember-ed
Posted in Safe Trades, TIM Lessons