That title is just about the worst combo there is and yet I went full steam ahead, shorting 1,000 FPP five minutes after the market open into a spike I thought to be ill-fated. Nearly right away when I was down 20 cents on my position, I knew I’d screwed up. Despite my warning everyone about the dangers of shorting these rocketships before they go red and the fact that I made the exact same mistake just two days ago, I even refused to take a $150 profit, instead wanting more, almost inevitably getting squeezed for a $600 loss.
I guess it’s true what they say, you can’t t each a greedy Jew new tricks.
I explained my rational for breaking the very rulesI created to protect myself the other day—not that its much of an excuse—and today was no different, except FPP was double the price and I got squeezed for double, 50 cent/share as opposed to 25, too. Fitting, right? Again, I was right about the morning pullback after the spike, it just happened $1 higher than my entry!
(Soooooooo much better to go long these things, but here’s another new twist to the problems caused by the SEC’s absurd pattern day trading rule—since you can’t go in and out, in and out, in and out of any 1 stock over one five day period, my specialty is going short and I don’t think these runs can last another 5 days—if I buy for $1-2/share gains, which is all I’d be comfortable doing, I probly wouldn’t be able to short them when they crash. And due to my skillset, I’ll be very comfortable holding these suckers for $3-5/share on the downside. So, forget about me whining about not being able to trade, now I gotta whine about being forced to play these stocks only from the short side!)
But today is just a typical amateur mistake created by me wanting to get back to even for the month (horribly typical trader emotion, now down 4% booo hooo you little bitch), getting too comfortable shorting this supernova pattern (over the past few months, each time shorting after this many days would’ve worked, of course this is why commodity plays are different!!!) and the fact that the spammers like KYUS, FOUR and FORC aren’t collapsing like normal so there’s really nothing else to play.
And that’s the key to avoid making similar mistakes—come in with no expectations. I built it up in my tiny brain that these commodity plays will fall apart and I have to profit from it. Blog post after blog post, I’ve been saying, watch these stocks, today they could/should fall apart when in fact they’ve showed no signs of true weakness whatsoever. It’s a testament to my taking quick losses that after being so wrong so many times in a row now, I’m only down $1,500 or so off my highs.
So, do me a favor, if you must try to profit from these potential quick morning drops—which I don’t recommend—it’s far far far far far better to short a strong stock’s that’s gone slightly negative on the day as you would’ve made $2/share on BWEN, $1/share on HYBR and 50 cents/share on KUN, MMGW and CPSL before some of them bouncing.