This is a profession where we know 90% of the players lose—you want to do everything you can to not be one of them. What’s worked for me is short selling weakening stocks that have a bunch of overhead resistance and if the price action doesn’t pan out EXACTLY like I want, cutting my losses quickly. I’ve proven both these points with my latest trades on COT and ASTI.
As I posted the other day, I shorted COT at $3.48, encouraged by a late afternoon crack of sideways price action, making em think it’d seen its top. Unfortunately, overnight good news caused a 15 cent/share gap higher—not much, but definitely not to my liking. Thought about holding, but when I see fading volume and 20k and 30k buy orders—whether they’re real or not—there’s the potential for a big squeeze, so I covered my 1,000 shares at $3.60, a $140-ish loss. Not bad, just playin’ it safe.
Minutes later, the stock was looking to go negative and I tried reshorting 2,000 at $3.55—order REJECTED. Too much trading for this under $25k trader, pesky SEC-Reign-Of-Terror-Rule (Pattern Day Trading Rule (PDTR) should really be ROTR) stopped me…stock drops nicely down to $3.25—annoying $500 gain missed, but this is why most traders play FX and use tons of leverage (SEC you realize you’re punishing the good guys and encouraging the bad ones, right? AKA any economic disaster is squarely on your shoulders). Gotta learn I can’t enter and exit as I please, like being on probation for a crime I didn’t commit—never gonna get more comfortable risking losses.
Focused on writing most of the day, but then recent runner ASTI showed signs of afternoon weakness, cracking the day low at $16.20. Sure, plenty of support all through $15.6-$16, but this one was up waaaay too many days in a row, this was its first day, panic was possible—and panic sometimes cuts through support levels like warm butter. Shorted 300 shares at $16.13, not a great entry, but not bad, waited, waited, waited, lots of buyers just over $16 wouldn’t get taken out…until a 20k sell order showed up on the as at $16.05…that scared buyers and the tank was on, right before the market close, coulda woulda shoulda gotten ugly.
But it was stopped cold around $15.90, a pathetic 10 cent panic—screw this, waaaaay too many buyers to risk holding overnight, covered on the bounce at $16.10, made nada after commissions. Sure it finished red on the day and under $16.20 intraday support, but it’d also gapped higher the previous few days and was already $2 off its highs, wasn’t gonna risk it.
Today COT was strong from the get go and ASTI dipped 50 cents before spiking $1.50-ish. Both prove themselves to be more bullish than bearish justifying my decisions to get out…$140 loss is perfectly acceptable, no positions, now I go back to stalking my next prey…