Controlling A Stupid Trading Mistake Means An Opportunity Lost
Posted by timothysykes on Tue 6th of May, 2008 08:47:26 PM
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Despite my rather long list of potential plays I posted this morning, I had two clear favorites—LGDI and VRML—two sketchy and failing, respectively, penny stocks that were up in excess of 100% over the past few days on fluffy news, a contract and a poorly researched NBC video claiming this near bankrupt company was gonna cure Ovarian Cancer (seriously, I can’t make this junk up), respectively again. So, at 7am (early bird gets the worm), I dutifully reserved 2,000 shares of each stock to short—as both were hard-to-borrow—putting my limit orders waaaaay above (or as high as my buying power would let me) their current price, LGDI at $5.49 and VRML at $3.99, intent on ratcheting the down if and when I wanted to short.
Fearful of a large VRML price surge, I commented on my blog post at 9:36am “cancelled my VRML order, not enough buying power to worry about it executing” and focused on LGDI—as it was weak the day before. Tried shorting my 2,000 shares right near its weak open at $4.35, but didn’t get executed…it quickly dropped to $4.10ish, but I didn’t want to chase it…fearful of a morning fakeout (proven correct over the rest of the day—good avoidance)
Next up was VRML, which was spiking from $3 to $4.75…I posted “VRML sooo thinly traded, let it run, I still have my shares borrowed for the day, just in no rush to use em” Whew, glad I canceled my short at $3.99, as I celebrated in a post at 10:05am. Still, at $4.25, everybody is talking about shorting it, so I post THESE rules about patience
But now at 11am, I figure it’d be good to re-enter my short, so I login…wait a minute—WTF, my short had executed at $3.99?!?!?! I posted my disbelief as I chatted with Thinkorswim to see if there was anything that could be done about this error.
Apparently, I’d canceled my LGDI short instead of the VRML one—the same bush league mistake I’d made just last week on MXC, made more painful this time around by the fact that I was telling everyone else to have patience and wait for the potential short squeeze. And at 11:30am, with the stock squeezing early shorts JUST AS I ANTICIPATED, I added 1,000 more shares short at $4.90 for a total of 2,500 shares at a pathetic average of $4.36. At $5, I was risking waaay too much—down $1,750, but this was a great midget holding up a basketball player failing biotech play in the same vein as REED, VION and PSTI, each of which I’d successfully shorted—so I had to have faith. And then, the wall of sellers showed up…
At $5, then $4.90, then $4.80, $4.70, $4.55—with the stock in freefall, I couldn’t help but exhale, covering 1,500 at $4.45 and 1,000 at $4.35—total loss, $180 after $30 comissions. Whewwwwwwwwwww. Whewwwwwwwwwww.
Over the next hour, my celebration turned to regret as the stock dropped another $1/share…no way would I have held 2,500 shares for that big a gain, but the possibilities are endless, probly missed out on a $500-$750 gain on an ideal trade shorting 1,500 shares AFTER the wall of sellers in the $4.60-$4.70 range, covering just above $4—as sooo many of you readers did (and more, Davey, not coincidentally the TIMbucks leader, made $1+/share on 3,000 shares!)(sissy value investors ain’t got nothin’, it’d take them 3-5 years to match these % gains)
This was both my best and worst trade of the year and the good news is that thanks to lessons I’ve learned over the past decade, this outcome was pretty much the worst case scenario and there are far worse things than a missed opportunity and a 1%-ish loss.
For me, my emotions run the gambit:
Experienced Trader
I screwed up, but it was an honest mistake—nothing I can do about that, more importantly, thanks to my cool head, I escaped with just a scratch, coulda been a lot worse. I can even take some great satisfaction in knowing how great a feeling it is for my readers to profit so definitively and quickly, especially since any of them are finally posting about their gains! Nothing else like it, welcome to why trading is so great!
Former Greedy Jew Hedge Fund Manager
I probly just helped make my readers in excess of $10,000-$20,000, I want my 20%!
Ambitious Blogger / Publisher
This is great, if my readers can continually profit like this, they’ll have to talk about it, can you say viralllll…book sales…DVD sales…national speaking tour!
Philanthropist
Doesn’t even matter if I made money or not, the key is helping others profit, this is good, in time, it’ll be like donating millions of dollars to charity, except I’ll have taught my readers to fish for themselves and they’ll be able to teach others too!
Revolutionary
So short selling penny stocks into parabolic runups is crazy, huh? All you random BSers out there who’ve never done much themselves focusing on company fundamentals—how you like these apples?
Immature Prick
Suck on that Elitetrader Elitests, Traitor Monthly Traitors, Dealbreaker Drones and everyone else who’s never really bothered giving my strategy a chance! I can say whatever the f$#@ I want—like buy my DVD cuz you gotta learn form the hundreds of charts and variables I cover in it you dumbf$&#s! Or buy my book cuz it’s gonna inspire and caution you as to ALL the risks and rewards of this kind of trading. And no matter how tired people get of me promoting those and future products, they’ll have to check in cuz—for now—there’s nobody else out there with my experience, openness, thick skin, work ethic and determination to open this game up to everyone!
And Ultimately Rational Businessman
This is just the start, but don’t get ahead of yourself, take it one pump at a time, teach one reader at a time, answer all questions even if you get days/weeks behind, this is gonna be huuuge cuz I got nothing to hide and no life / family whatsoever and that makes me better than every other “financial guru” around
Check out my brand new DVD, ShortStocking - the only guide you'll ever need to profit from short selling!
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35 Responses
Other Websites Referencing This Post
- | TIM - Timothy Sykes
- Timmayyy
- Why PennyStocking Is Not An Optional Course, It’s Required | TIM - Timothy Sykes
- Feel Good Friday: Nailing A Perfect Short Sale On Vermillion, Inc. (VRML) | TIM - Timothy Sykes
- How I Screwed Up Shorting Cannon Exploration Inc (CNEX), Down 40% Today, While My Readers Are Making Tens Of Thousands | TIM - Timothy Sykes
- How To Reserve Shares To Short On Hard To Borrow Stocks | TIM - Timothy Sykes
- 10 Stocks To Consider Short Selling, I’m On Fire So Pay Attention | TIM - Timothy Sykes
- Three Small Profitable Trades For TIM; Three Giant Gains For TIMalert-kind | TIM - Timothy Sykes
- TIM 2nd Quarter Review: I Suck But Most Everyone Else In This Joke Of An Industry Sucks Worse | TIM - Timothy Sykes
TIM,
NLS? Earnings beat I guess but a pretty supernova…
TIM,
or how about your old friends at SIX? Don’t they owe you for not fulfilling their contract?
earnings plsays cannever be supernovas, supernovas are defined by a teprorary price catalyst, like newsletter mention, articles, promoters
Tim, I think someone hacked TIMbucks.
Great post. What do you think about tomorrow… here is my watch list
SNG - big run up but messy chart
EPM - watching for breakout above 6.00 mark
CNEH - watching it for a huge double top around 4.50
PDO - dangerous oil play who knows where this one’s headed
VNDA - looking for it to crack 5.00 then ride the wave
what do you guys think?
Tim,
Just keep working hard, F the haters, and as your intitial group of readers learn and profit as you said you’re biz model is gonna have unlimited potential to grow. The best thing that will happen is when you start getting emails about a college kid like me or an average person turning 5-10K ino 25K into 50K and so on. I started following you in Nov. from a link from thestreet.com, since then I have turned 3K into 7K and I haven’t been to the street.com since(except to read scam stories). Keep killin em’ slowly Timmy…
Dude, I RESPECT that brutal honesty.
It’s the reason I stick around, the reason I bought the DVD’s, and I would bet the reason you are a great trader.
If a trader can’t rapidly admit he is wrong, and adapt then he won’t be in bidness for long. Mucho Props to you.
HEY DAVEY, whats going on man, I read your post and had to comment because I started following tim back in NOV as well with the same exact size account as you have but unfortunately I haven’t been even close to the success you had and I read and study his posts religiously. SO I was thinking maybe if you want we could be trading buddies and bounce ideas back and forth stocks/ entree’s /exits and etc back in forth…. let me know if you want to, that would be incredible!
Sonid, I saw CNEH on the clearstation/small cap center screens big $ volume. I passed on it, but I’m pretty conservative and like to get confirmation on MACD or RSI.
By the way, check out the TIM radio interview with Cameron Fous, make sure you got a pen and paper the guy actually teaches you his screen.
That’s alright Tim, you’ll bounce back I am sure. You da man!
Sonid,
I made an enormous amount of that on the COINW short…that thing tanked from about 12-3 I think in a few days, since then I have played it rather conservatively taking a few 100-150 dollar losses while making about 150-400 avg. on the winners. In the past couple of weeks I have left close to 3K on the table from BSHF, VM, and PDO but because of my small capital I prefer to take gains and cut losses quickly. Trading is different for everyone, some people today held for a long time while others played it safe. Just keep at it, and remember no one goes broke from taking a profit.
Davey - I appreciate the post and your words of encouragement and I look forward to finally posting some winners and listening to words of wisdom on the boards
I love Tim’s supernova play strategy. Does anyone follow any other strategy and is that as good as supernova strategy? I have been following Tim and learnt a lot, made some money, now I want to buy his DVD. Tim, is the book included in your DVD pacakge or it is separate entity? Thanks.
Tim, man I’m pumped. Missed LGDI due to issues with TOS not allowing me to change an order (they have that resolved now). Anway, I’m pumped as I went all in VRML at $4.50 average and covered at $3.42. It’s a small $2,000 account for me I’m going to trade aggressively. Now up 20% in one day!
trust me, ive looked for other strategies cuz while this is nice for a few hundred grand /year, its tough to any more than that. i now that sounds cocky, but its 9 years experience, not arrogance talking. yes an autographed book comes with the DVD and u will understand supernovas better so u can adapt to their inevitable evolving patterns
awesome burky, you guys making $ is really all i can ask for
tim- you havn’t made any comments yet on IAR. do you think that’s going to be a good play in the near future?
burky, congrats on the 20% jump. Tim how confident are you on me starting an account at TOS with my income tax of 643? Of course I’ll add with my stimulas check.until my restriction at etrade my plays are going to have to be crucial.
i have no idea what the hell a 643 tax is, everything i post is for educationa and entertinaent value only. i use thinkorswim cuz they’re the best for what i do. plenty of other brokers who arent the best
I’ll take a few 100k a year doing this.
I am starting in the summer!!!!
So broke right now.
I’m going to combine Sykes strategies with Faus’s strategies, along with a few nuggets of my own that I’m trying out. We’ll see how I fare.
I missed today’s shorts…no buying power, and I’ve already got a bunch of longs from Faus’s recent buys.
How the hell did miss FEED, that’s what happens when you take a day off. I’m still looking for my first short. Still long on Visa.
Congrats to all the winners. I’m learning.
Tim thoughts on IAR??
IAR is rising on earnings, so it’s most likely unpredictable. However, it would be most likely to go up over time because it has been beat down so much lately. I wouldn’t play it unless you want to park your money there.
sorry tim $643 dollars in my trading account
stylekid,
what is your account name on WSS?
noob, same as here ivegotstylekid.