Let the records show (CRY) and (NOG) as Exhibits A and B, whose charts I’ve posted HERE and HERE, respectively. Both have gone in the direction I predicted—CRY higher on the breakout and NOG lower after going vertical—but I haven’t touched either one. I’ll tell you why.
Sure, the SEC has a noose around my neck—and every other trader under $25k—but for all CRY’s and NOG’s perfect price action, the big $ rewards just weren’t there. Given my tiny account size, each postion woulda been around $4k, basically 400 shares each…if I’d timed them perfectly, which is rare, I’d be up 50 cents/share on NOG ($9.60 to $9.10) and 60 cents/share on CRY ($10.10 to $10.60), basically $200 each…over 2 long days!
Instead I chose to trade PSTI—a blatant failure of a company (reverse splits are a dead giveaway)—half the price of CRY/NOG, allowing me to trade 1,000 shares; sure a bit bigger $-wise, but since it’s not a real company—the stocks of frauds/failing companies are more predictable because the players are bitter shareholders, pumpers/promoters and short sellers aka all have clear motives—I felt more comfortable.
And instead of having to hold and wait for 10%-ish volatility over 2 days (real companies have sooo many more variables/players aka take longer to make big moves), I made my first $330 in 20 minutes and now the other $100+ basically holding overnight, even though my trades were far from perfect and the stock has definitely not acted the way I thought it would.
I know this is a difficult concept to accept, that’s why I take such pride in teaching it!
TIM Lesson: Low priced stocks rock because they’re fraudulent/failing hence simpler/more predictable
Posted in 101basics, Basics, Pattern Day Trader Rule, TIM Lessons