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Recently, I had two stock picks that didn’t work out as planned, the following is what I sent TIMalert subscribers:
Shorted 1500 CBOU at $5ish…found shares at Interactive Brokers…this is in my longer term account as the reason for this short is its PERFECT multi-month head and shoulders…this thing looks like it can fall off a cliff if it cracks $5…volume has faded nicely too, only risk is positive fundamentals news by the hot players in the coffee sector DDRX/GMCR which aren’t fading like CBOU…stop loss at 5.30, goal is to cover in the low $4s or even the high $3s in the next few days/weeks
Shorted 5000 CHINA $2.25ish…yes, it still up on the day, but volume has begun to fade and this is the 3rd up day in a row with hype-filled press releases each day…I know this company, they’re issuing positive press releases in order to get the stock up and pull off their financing attempt…remember the IIJI trade setup in my book? Same exact situation, odds are this financing fails because the company stinks…today’s positive revenue press release is just one subsidiary, goal is to cover under $2, stop loss at 2.40ish
CBOU dropped perfectly, but then industry leader GMCR was breaking out, which brought up DDRX so I couldn’t risk CBOU spiking to so I sent this to TIMalert subscribers:
Covered 1500 CBOU at $4.90ish, Can’t Risk It When Coffee Plays Are Surging…I’m conflicted, CBOU is breaking down perfectly, but competitors DDRX and GMCR are both breaking out nicely…GMCR is the leader of the this niche and it’s breaking out to new all-time highs (started surging right after I shorted CBOU, doh!), leading to a high probability that DDRX and CBOU will follow as shorts are squeezed…I’m playing this safe, not risking it…I even said in my initial short alert the risk is GMCR/DDRX have some positive fundamentals news, well, positive technical news is even more important to short sellers…I’ll always always err on the side of caution, taking a small gain or loss on this doesn’t matter, the key is protecting my account for a potential big loss as short squeezes are often fast and brutal…my apologies for this happening within 2 hours of my initial short, but thats trading, gotta be willing to adapt to changing market conditions
That turned out to be a good cover as CBOU did in fact spike…and then came right back down to the $5 level (it’s still a potential short)…TIMalert subscribers have learned to cut losses quickly (and for those who don’t like short selling, some have learned to use my buy-to-cover alets as buy signals and people like Scott actually profited!!):
$150 profit on CBOU here
-BTB
Covered 1k @ 5 for $90 loss.
-nifri
Bought at 5.03 after the alert to cover. Sold at 5.29 for $240 gain.
-Scott
lost $78.
-JEG
$400 loss
-bill
first trade with TIMalerts, lost $ 830
-dark4366
Out with a loss of 120$
-sunny
First Tim short: short at 4.99, covered at 5.25 = lost 125
-theladder
CHINA dropped a bit too, but not to my goal of $2, so I sent this to TIMalert subscribers:
Covered 5000 CHINA At $2.14, Decent Profit…I got the gradual fade I wanted, but its really slooooow and so far its been unable to really break below key 2.15 support…possible short still, but downside of only 10 cents/share or so in the next few days doesn’t really interest me, probable as it may be…decent $400 predictable profit
Most TIMalert subscribers couldn’t even find shares to short, so the gains/losses were minimal:
covered CHINA on alert for $134.
-Reaper
Covered CHINA for a cool $0 profit.
-parabol
7$ profit
-Sunny
Covered CHINA @2.19 for a $30 loss
-Nifri
covered CHINA with 100 profit.
-bill
$ 80 profit on CHINA
-kondal
My $500 in profits from these two trades is irrelevant…that’s just me playing it safe, but it wouldn’t have mattered if I had a $500 loss…
So, what is the main lesson from the above trades? I EXIT MY TRADES QUICKLY WHEN EVERYTHING ISN’T WORKING OUT PERFECTLY…WHETHER I HAVE A GAIN OR LOSS I JUST GET OUT TO NOT RISK DISASTER
Learn this important lesson and if you want more details lessons, go HERE…successful trading is all about discipline.
Posted in Adapting