How I Screwed Up These Two Near-Perfect Calls To Sell Short
Take a look at my latest two trades—shorting 1,200 shares of probable-fraud spam-happy BSHF into a morning dip at $2.55 and 1,000 shares of failing business-so-let’s-float-a-takeover-rumor VM into a nasty slightly negative close yesterday at $4.01—both of which tanked 15%+ within a few hours of market action of my shorting. Great calls to be sure, but I somehow managed to screwed both up–and judging from the comments, I’m glad many of you guys did better!
Unfortunately, the BSHF pattern appeared the day before this new website went live and since it didn’t tank in the early morning EXACTLY like I wanted, I covered for a $75 loss since I had a million things to do to make the launch. Didn’t feel guilty about it until later in the day when it tanked 50 cents/share in a perfect representation of a spam stock falling apart! Sad sad sad, but one of those rare unavoidable situations.
I have no excuse for taking quick 5 cents/share profits on VM–just my ferret-on-crack-like impatience–same exact breakdown pattern—actually an even better pattern considering BSHF hadn’t had a negative day yet—I just got scared out by the fact it didn’t tank as quickly as I expected (as I originally posted pre-market HERE)(notice I even anticipated a morning bounce ughhhh!)
When the big tank came later in the day, I couldn’t re-enter due to buying power restrictions, just the latest example of how absurd the pattern day trading rule is, and certainly not the last.
In both cases, I was right to take short positions aiming for morning panics, but the stocks didn’t act EXACTLY the way I wanted and I—not being patient/having too much other stuff to do—played it safe and got out, basically pathetically losing $50 between the two.
The good news is we know this happens with me–far too often–so you have two choices: a) you can play it safe like me and either breakeven or take small profits or b.) have some patience, take on a little extra risk and hold longer, seeing if this strange pattern is really all it’s cracked up to be.
Either way, I think it’s fair to say I’m beginning to prove PennyStocking, and more specifically this one pattern, is viable cuz it’s not your typical-money-losing strategy (as 90% of traders unfortunately experience) and it CAN be played using very little risk—smack in the face of public opinion regarding penny stocks and short selling 
, let alone this combination of the two.
So, next week, no traveling, no more website bugs, my head will be clear and I’ll look to play similarly worthy opportunities with the goal of not only enriching my readers’ trading accounts, but also own account!
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1YngvaiMalmsteve
May 2nd, 2008 at 7:30 pm
Hey, Tim, I’m curious what you think of setting small “stop-loss” rules for when to bail on a short. I bailed on VM way too fast, and I’ve been considering giving myself a 7.5% rule on trades (whether going long or short)…if it goes 7.5% in the direction that I wasn’t anticipating, then it’s time to bail. If I had a rule like that, I would’ve stayed with VM and made a nice profit rather than losing a small amount (I shorted at $4.02 and bailed on the bounce at around $4.13). I’ve had some other recent long trades I bailed on too quickly and missed profits. Of course, there will sometimes be exceptions, but I’m thinking setting a general rule will help me be more patient.
2timsykes
May 2nd, 2008 at 7:34 pm
i’ve never used a stop loss in my life, when these stocks go against u, they blow far too quick for your stop loss to do much of anything
3noobtrader.08(TIMBUCKS: $78)
May 2nd, 2008 at 8:26 pm
I like the idea of setting a stop-loss “rule-of-thumb” too. My understanding is when you set a “comfort” rule for yourself, you never break them.
I think I would keep my stop loss at 5% though… I guess I’m a chicken shit. =D
4YngvaiMalmsteve
May 2nd, 2008 at 8:35 pm
I’m currently setting a complete list of rules for myself, based on my past failed (& successful) trades. Most of my losses (although small) were because I broke these rules. I’m toying with a 7.5% stop-loss rule, with much smaller %’s in certain situations (to avoid the types of run-away situations Tim is talking about). I’m also setting rules for what types of trades to enter and what types to avoid.
I’ll keep you guys posted on how my rules pan out and if they’re successful. They’re also going to evolve based on how (and if) they work.
5noobtrader.08(TIMBUCKS: $78)
May 2nd, 2008 at 8:44 pm
Cool. I’d be curious to see what your rules are right after you implement them and then see how you’ve done, sticking to those rules, after May is done.
I’m a total stat dork that way.
Either way good luck.
6YngvaiMalmsteve
May 2nd, 2008 at 9:22 pm
Yeah, noobtrader, the other reason I want to set rules is to help keep emotions out of the equation. I’m only working with an account of $2K, so while I’ve been good at keeping my losses small, I’m on a streak of small losses that really start to add up when you’re dealing with such a small account size. And some of those losses would’ve been nice gains if I had been a bit more patient (the other losses would’ve been trades I would’ve avoided had I set rules). So my rules will help me establish a certain amount of patience (but not too much!).
7noobtrader.08(TIMBUCKS: $78)
May 2nd, 2008 at 9:53 pm
yeah, everything I’ve read, and more importantly what i know about myself (and have in common with Tim) is that I have ferret-on-crack-like impatience too, so temptation and/or impulsivness MUST be contained and the only way to do that AND prevent bottomless losses is to set rules.
As my nickname states I’m a NOOBER-BOOBER-wanna-be day trader. But I (WE) will learn, and I (WE) will succeed; as Tim leads us mions up the financial ladder… 1 “short” at a time.
8Tony Ellis(TIMBUCKS: $23)
May 2nd, 2008 at 11:01 pm
Keep up the good picks. I might have to switch to a real broker that allows me to short under $5. Anyone make any $ going long GTE, VIV, or JRJC? I had gains on all but none turned out to be great plays and my timing wasn’t great.
p.s. HOw do I get my picture next to my comments?
9YngvaiMalmsteve
May 2nd, 2008 at 11:09 pm
Tony,
I bailed on my long JRJC position when it dipped to around $21 today. Now, if I had rules set for myself like I’m planning on doing, I would’ve waited longer and would’ve ended up making a profit when it hit $23.50.
10YngvaiMalmsteve
May 2nd, 2008 at 11:09 pm
Yeah, I also second Tony’s question. How do we set up our avatar?
11jj(TIMBUCKS: $55)
May 3rd, 2008 at 12:31 am
hey Tim…are you going to be at any of the traders show expos? http://www.tradersexpo.com/msc.....asp?scode=
12Tony Ellis(TIMBUCKS: $23)
May 3rd, 2008 at 12:59 am
That’s a tough loss on JRJC. I sold @ 22.98 at the open. I’m taking profits quick on everything right now. I don’t use stop losses but I always sell when a stock goes negative for the day. A strong breakout generally won’t go negative for the day. I’ll buy again if it goes green on strong volume in the afternoon and is above breakout level.
13Adarsh Dilip (moderator)
May 3rd, 2008 at 1:07 am
Hey Tony - just go to http://en.gravatar.com/ and upload a pic there - and it will show up here automatically everytime you sign in.
14timsykes
May 3rd, 2008 at 2:07 am
i dunno about traders expos, considering i say the whole industry is full of shit, its kinda tough…i’m planning a speaking tour thats gonna be unlike anything anybody in trading’s ever done….
15UFgemini(TIMBUCKS: $8)
May 3rd, 2008 at 9:10 am
I tried shorting FEED yesterday and get raped in the process. I need to work on my entry points better. I am still holding onto this one over the weekend. As volatile as this stock is, I should be able to recoop some of my money lost.
16ivegotstylekid(TIMBUCKS: $73)
May 3rd, 2008 at 10:26 am
wow, I’m surprised you covered that early. Made a nice profit in my wallst survivor acct. Shorting VM and RT. Up 2000 on the day.
17timsykes
May 3rd, 2008 at 10:38 am
sorry to hear about shorting feed, i’m telling, shorting these momo stocks is not something u do randomly–forget about should make it back, thats how big losses are created as they could squeeze this thing to the 20s
18monkiman(TIMBUCKS: $29)
May 3rd, 2008 at 10:56 am
rape?? lol.. thursday was FEED’s fourth day down… very risky, has chance to retrace or trend upward…
19UFgemini(TIMBUCKS: $8)
May 3rd, 2008 at 11:40 am
I hear ya monkiman…I just thought with it being the 4th day down, didnt think it was going to go past its 52 week high. It will be an interesting monday at opening.
20noobtrader.08(TIMBUCKS: $78)
May 3rd, 2008 at 11:41 am
Thoughts on Long vs. Short; which is better? I realize this question is subjective, but I’m curious to hear what everyone’s opinion is.
In as much as I’m a noober-boober wanna-be day-trader, I would like to do both, however my (trading) bread-n-butter will be shorting. Entry points are crucial, which I’m still not 100% clear on… what exactly is a “good/great” entry point for a short?
21noobtrader.08(TIMBUCKS: $78)
May 3rd, 2008 at 11:45 am
ivegotstylekid,
what was your entry and exit points for VM? Did you buy before or after that $2.40 bounce?
22How Bubba Sees It
May 3rd, 2008 at 9:00 pm
Tim, you got too many irons in the fire. When it comes time to do the branding, you do your ferret thing. But, pick ‘em for us, we’ll trade ‘em and laff all the way to the next trade. When you made your million +, you were probably concentrating on the market and you ain’t doin’ that now. Yeah, you pick ‘em, we’ll short and post how well we did with your short picks. It’s getting tough to keep reading how you screwed things up for your shorts. Bubba’s got respect for shorting $ to the account based on some of your picks. Bubba’s gotta say thanx, but Bubba wishes better luck for you to hit your $M again. Like I Ching say: Perseverance Furthers.
23timothysykes
May 3rd, 2008 at 9:33 pm
actually when i made the most $ i didnt follow the markets that closely–that way i was able to hold longer and ignore the intraday gyrations and noise…which is why i think people who do this part-time will do better than me
24ivegotstylekid(TIMBUCKS: $73)
May 4th, 2008 at 4:59 pm
hey noobtrader,
I shorted at 4.13 waited a couple minutes after the open for the good news on the market to fade, and cover for a .53 cent/share gain. Too bad it’s fake money, but it’s still fun.
Just bought a book called sticky stock charts to get a better understanding on chart trends, pretty good so far.
25noobtrader.08(TIMBUCKS: $78)
May 4th, 2008 at 6:46 pm
That’s a wicked gain “stylekid”. Fake money? Which site are you using? I’ve got 10K (real money) that I want to start trading. Obviously attempting to follow in the footsteps of Mr. Sykes.
I’ll check out reviews for that book you mention; thanks.
That said, I’m not doing anything until I order Tim’s DVD set and perhaps sign-up (free of course) to a website that offers, artificial trading… so I get a better feel for it. Reading charts, shorting, etc. On this site you use, how many stocks do you trade at a time?
Tim, for accounts UNDER 25K, using TOS as my broker, how many trades a day/week do you get?
26timothysykes
May 4th, 2008 at 8:51 pm
supposed to be limited to 4 trades, but i seem to be able to get away with 5-7, the key is not abusing my buying power
27ivegotstylekid(TIMBUCKS: $73)
May 4th, 2008 at 10:36 pm
noob,
check out wallstreetsurvivor.com they have a portfolio challenge on there, pretty fun place to try out some of your own ideas
28noobtrader.08(TIMBUCKS: $78)
May 4th, 2008 at 11:05 pm
Tim, I’ll assume because you’re you, you can do that; such is the life… =D
Stylekid, thanks for the site duder… I’ll check it out and get back to you with a progress report. =D
Are you using that site too?
29noobtrader.08(TIMBUCKS: $78)
May 4th, 2008 at 11:11 pm
Tim, Question…
On the BSHF chart (above), that bounce at 2.40…
A.) Is this “predictable” behavior or is it a dice roll? (I think this is an obvious answer…?)
B.) Is this an example of where your ferret-on-crack impatience gets the best of you? i.e. you would cover your short IF you saw a stock bounce back to the 2.50 range, rather than ride out that bounce and wait for the plunge?
30ivegotstylekid(TIMBUCKS: $73)
May 5th, 2008 at 8:32 am
yep, i just signed up last week
31Bryan
May 5th, 2008 at 10:09 am
If you speak in DFW Texas I’m going to see you speak. You have inspired me to one day attempt to run my own hedge fund.
32noobtrader.08(TIMBUCKS: $78)
May 6th, 2008 at 10:19 am
Stylekid,
What’s your screen name on WSS?
33ViarronTeavomo
May 7th, 2008 at 2:31 pm
nice work, guy