Yup, Even A $12 Loss Offers Important Trading Lessons
Why bother detailing a $12 loss? Because every trade matters, the good, the bad and the scratches. Important lessons are everywhere…
Shorting 400 COIN at $8.78 right before the market close on Wednesday turned out to be a good idea. I shorted because the stock was breaking down over multiple time frames, intraday, multi-day and multi-week, failing to hold keep support at $9 that I’d expected to put up more of a fight. And the daily wall of sellers have entered. Oh yeah and the company is a true POS—no pumpers or Garty the faux guru—can change that. Only problem was I had a Thursday morning meeting so it’d have to tank quickly or I’d have to risk it while I was away from the computer.
Since TIM is so tiny (must protect every $ to get the magical $25k SEC freedom hump), I’ve never used stop losses and COIN is known for squeezing shorts, holding was out of the question. In after-hours action Wednesday night, I tried taking a $100ish gain at $8.51, but discovered Thinkorswim closes after-hours action at 6:30pm. Wasn’t that pissed until the next day when the stock gapped higher to the low $9s.
But even with 20 minutes to go before my meeting, I still held since the gap looked shaky…3 minutes later, the stock was unchanged back at $8.72 x $8.80…good decision to guess the downtrending would remain in place…I waited a few more minutes but the buyers held $8.70 well, so it was a possible bottom…running out the door, I covered my shares at the exact same price I shorted, $8.78…losing $12 due to commissions.
One hour later, I got back to find the stock down to $8!?!?!?!?! Probable wall of sellers entered, gradually pushing those determined buyers outta there. Early exit as usual, pisses me off, but it’s a great lesson:
TIM Lesson: To maximize your trading gains, never schedule intraday meetings
No coulda woulda shoulda here, my meeting yielded about 10x what I mighta made on this trade, such is the reality of a publisher / trader not a trader /publisher. More importantly for you, this drop was predictable. Especially when you see it went from $8.50 to $below $8 on huge volume in less than 5 minutes—can you say stop losses getting taken out? Classic classic classic Supernova pattern breakdown. Where the bottom is, nobody knows. Wouldn’t be surprised to see the stock below $5-6 in a few weeks, but I’m not betting on it—not with my portfolio so small—spike risk galore…You’ll see as my portfolio increase and I have some cash to spare, only then will I take on some longer term shorts…
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1Mike
March 21st, 2008 at 3:19 pm
Lesson in hype …
Barry Ritholtz says: “Most of the guys that spread these rumors are clueless retail brokers, dart throwers, collectors of hype, innuendo and other poor bases for making financial decisions.”
http://www.esquire.com/the-sid.....ar-stearns
2Adam(TIMBUCKS: $2)
March 21st, 2008 at 4:29 pm
^ That is a GREAT article and validates everything discussed on this blog. Watch DHI, although it doesn’t play into TIM’s strategy it has been a fantastic short at $16 ish
3truth
March 21st, 2008 at 4:59 pm
Yeah sure tim, you leaked these embarrassing emails, just like Eliot leaked the whore story
What about the girls who bought party dresses Waaaaah!!
tims grovelling email he is so proud of:
Rich emailed me saying you’re holding firm that you don’t want me there tomorrow night, but let me just try to change your mind because this last minute notification that I’m disinvited has put me in a jam.
1. Rachel and I talked / emailed last week about me coming and she was fine with it, so I made plans to meet up with nearly a dozen friends. Some of these people I haven’t seen in a very long time and we’ve been talking all weekend about what we’ll do after the party.For me to bail on them at the last second would be extremely rude.
2. I will have no cameras and will not be covering the party for my new jobs as reporter for TheStreet.com (I’ll be starting as a writer in a few weeks) and MSN Money (I am their goto video guy). I’ll be low-key, really.
3. I invited 2 female friends who went out and bought new dresses for this event. I don’t know how to explain it to them that I can’t attend with them.
4. While you guys seem to think ‘I’ve made a mockery of the list’ with my eccentric behavior, other media outlets now recognize me as a finance expert / personality. Sure I have an ego, but my position is backed by CNBC (7 appearances since the beginning of the year), CNN (I debated greed with the most powerful religious leaders last month), FOX (I was on Cavuto on July 4th), Oprah and Friends Radio (they loved my book and are having me on in a few weeks), Young Money (I will be their cover story for their October issue, Penthouse (I will have a feature story in their Christmas issue), and Wiley (they offered me a $35k advance for my book).
5. You guys are took a pretty good shot at me in this latest issue so even if you really believe I somehow embarrassed you last year, I consider us even.
So please, give me a chance, once you read my book and see what I’m trying to accomplish with my life, you’ll see I’m not such a bad guy.
4Steve
March 21st, 2008 at 9:29 pm
Tim, how do you deal with thinkorswim not having time & sales data?
5NeilTheRealDeal
March 21st, 2008 at 11:01 pm
what the hell is the post from truth?
6spud
March 21st, 2008 at 11:50 pm
tim you advertise FAPS
tell us more
does it work?
is it essentially a Quant program for retailers???
you should demo it for us all and tell us how it does for you-robots do work for no pay-sounds too good to be true-i hear big funds use robots also
7spud
March 21st, 2008 at 11:52 pm
how does one robot outsmart another? can a robot scan whole market in realtime finding which stock to trade????????????? we wanna know!
8NeilTheRealDeal
March 22nd, 2008 at 12:22 am
I’m pretty sure Tim doesn’t use robots. If you read some of his past blogs you’ll see that. He has a “Useful Posts” section in his forums telling how he finds his stocks.
9Mike
March 22nd, 2008 at 1:26 am
Another lesson in hype …
“A related shenanigan is the chief executive officer who goes on television to talk about his companys stock. J. Felix Meschke, a doctoral candidate at Arizona State University, finds in his paper CEO Interviews on CNBC — based on the 3,641 CEO interviews between 1999 and 2001 — that the average performance of a companies shares on the day of an interview was up 1.65%. In the 10 days after the interview, the average performance was down 2.78%.”
http://moneycentral.msn.com/content/p41488.asp
10Oliver(TIMBUCKS: $12)
March 22nd, 2008 at 3:44 am
I saw you had MALL on your watchlist. Did you also noctice the chart of VVTV? Its EXACTLY the same pattern as MALL.
11Alan
March 22nd, 2008 at 9:18 am
Tim,
I have exactly the same problem with closing early only to find that the market then goes the way I was hoping. I think the solution I am trying to aim for is to close one lot when there is a temporary level to take profit. The second lot, after markets have moved your direction enough to move the stop to entry and then try and ride it.
This is great in theory but I am only dealing in 1 lot sizes as that’s all I’m allowed to trade until my trading academy sees that I am consistent and allows me more than just the one.
The only way I am going to be able to increase is consistency!! They rather me make 10 prices every day than 1 day 40 lots and then a minus 20 the next etc.
Regards
Alan
12NeilTheRealDeal
March 22nd, 2008 at 10:04 am
Alan what is this trading academy?
13Evan(TIMBUCKS: $3)
March 22nd, 2008 at 10:19 am
Tim,
You just got a referral from my sister’s newly opened TOS account. Congrats! You Rock!
(disclaimer: Money received from referral should be used to purchase either nice pajama pants or beer.)
14timsykes
March 22nd, 2008 at 12:39 pm
Cool thanks Evan!
Yup, I’ve seen VVTV writing a post about all of them…
Never use trading robots, all thee ones I see advertised are TOTAL scams
Getting out too early isn’t that bad, just gotta focus less and let it ride sometimes