Controlling A Stupid Trading Mistake Means An Opportunity Lost

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.  

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A Decent Profit From The Airport Lounge, Now I’m Up 50% In 6 Months, Jewww Yahhh!

First time around shorting sketchy-100-year-old-oil-company-that’s-watched-the-world-go-by PDO, I barely made anything before it spiked hardcore and proved itself to be a full fledged Supernova, squeezing those stubborn short sellers who didn’t purchase my instructional DVD PennyStocking (or else they’d have cut their losses quickly) and putting the stock on my back burner as a potential short. So why today—when I knew I’d be hopping all over the place on planes, trains and automobiles during market hours—would I look to trade this sucker?

Simple: cuz I’ve got years of experience trading while traveling and considering this is the 3rd day short-squeeze-induced runup inside of a larger 8-day commodity-related runup, the odds favored an intraday breakdown of some kind—large or small would be determined by stop losses, fear, commodity prices and volume.  

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The Old Morning Drop Following The First Down Day After A Big Runup Trick

Going into today’s session with my overnight short of PDO, I was confident, if not ecstatic because I’d shorted into the first negative day of a decent-sized runup, even if it was KOG-like commodity play. At the market open, volume was very very light—5,000 shares in 10 minutes and yet when sellers took out the one bid at $6.20 that took it all the way down to $6.01…I didn’t want to cover right away as I thought it’d take out $6 and then stop loss selling might cause some panic, but bids piled up at $6.02, then $6.03, then $6.05…screw that, I covered at the ask at $6.15, making $27 after commissions.

Afterwards, some more sellers did come in and on total daily volume of 25,000 shares, the stock was $5.90 x $6—so I left $100+ on the table…boooo hooo, due to the illiquidity and it not being an ideal play, I played it safe.

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Minimizing Trading Losses: Two Overnight Trades That Didn’t Go So Well

From a few days ago, just hadn’t gotten around to writing about it…as I mentioned HERE, I shorted 2,000 (KOG) at $2.75 near the market close when it cracked sideways price action so I thought it’d go negative on the day—I was right that it did go red, but I didn’t take my 10 cents/share gains cuz I wanted a big drop—not a pesky $180 profit. Unfortunately, I had a flight to catch the next morning…

Took a later flight to watch the market open—wasn’t comfortable at all since it opened above the sideways price action crack of $2.80, covered at $2.82, a $160 loss including commissions. Screw that, played I safe…I can take $160 losses all day long. Later in the day, it went decently red down to the $2.60 area, so I wasted $400, but when I play volatile stocks, I don’t worry about predicting every 10-20 cent move—I take my 20-50 cents-$1/share gains thinking stocks will make much larger swings (so I won’t have to be perfect in my timing) (such as THIS trade)

Three days later and KOG is still bouncing between $2.60 and $2.90, a clear sign that a big drop was never in the cards. So, my loss wasn’t that bad. Decent trade…glad to hear any of you timed it better and escaped with some profits!  

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Frustrations Of A Short Seller

Awoke to discover no shares available to short of my top 2 potential plays—FEED and PSTI. PSTI was no biggie, it wasn’t a multi-day runner, but missing FEED pissed me off cuz it was a nice morning setup for a solid PREDICTABLE fall.

Yesterday it looked like it was getting tired, but it still wouldn’t crack. Today, near the market open, there was a 14,000 share buy order at $15.40 and as that got taken out rather quickly, it was clear sign to short as longs who were up big over the past few days surely were afraid of a reversal. Sure enough, the morning tank was on as it quickly took out stop losses at $15 on its way to $14.70-ish, a nice 70 cent/share drop from an easy entry. Sure, it rebounded over the rest of the day—impressive really, but then again it’s a true breakout so I expect the stock to be stronger than a pump and dump—but the play here was to cover into the stop loss panic. Next!  

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Short Selling Penny Stocks: Decent Profits But The Mistakes Remain

Late Wednesday, when I posted this article predicting a 25% drop in (PSTI), I thought it’d be over and done with by Thursday. But that move didn’t complete itself til today, my baaaaaaaaaaaaaad!

Can’t believe I covered my short above $4, too much of a lil bitch to hold this sucka. Sure, hindsight is easy, but look at the eerily similar price action after the last spike…probly more downside Monday. How about this, I’ll just go on predicting, you guys handle the trading, deal? :)

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Easy Short Plays: Short Selling Hyped Up Failing But Spiking Biotechs The Sequel

Last night, I posted about how excited I was to short another failing biotech into a ridiculous penny-stock-promoter-fueled price spike. Just like the last time, I wanted a 25% drop in stock price, but I didn’t get that, the price action just didn’t play out as I wanted it to—a decent 8% drop, but no big freefall. I still made $180 today off my wrong thinking, so life could be worse.

After an initial 15 cent spike to $4.67—not scary at all cuz it was just one big buy 14k buy order (what is it with these guys, other one at $5 yesterday) that got taken out quickly—the question was could we take out multi-day support at $4.35-$4.40…most of the morning it couldn’t so I covered 700 of my 1,000 shares at $4.40, a disappointing 10 cent/share gain…then it bounced, then very gradually it declined, but still didn’t crack, so I covered my other 300 at $4.37, then gradually…so gradually…$4.35 got taken, then $4.31, $4.25—I re-shorted 1,000 at $4.25 looking for a domino type fallout from stop losses getting taken out there, then onto $4…

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Two Decent Trades Detailed aka Why Having A Quick Trigger Finger Can Be Good

When I shorted 2,500 shares of (KBX) at $1.79 yesterday morning, I had little idea it’d drop 20% over the next 24 hours. No, I shorted it because its chart had gone vertical—meaning it was close to peaking—it was the third big up day in a row and the price/volume had already begun to fade the day before.

Experience teaches me that it’s extremely difficult for a stock on that third day to finish green, let along up 10%+ because since it’s up soooo much sooooo quickly that buyers begin hesitating, wondering if they can buy in lower, longs start thinking about taking profits and short sellers like me begin wondering if we should pounce to take advantage of this natural cycle. So I took the morning strength as early short sellers getting squeezed, aka temporary.Unfortunately, the stock also had three negatives in my book—it’s a gold play—influenced by the price of the gold itself, aka not an ideal penny stock hype play, sure it’s gone up a lot but it’s only up from $1.25, aka not much more than 40 cents short-term downside and it’s on the AMEX—ridiculous price spreads between the buyers and sellers and market maker games.

And yet I shorted in the morning no less because a) the volume had faded substantially and b) sellers took out a big block of 15k at $1.79, I didn’t want to miss out on any sudden price collapse form it going green to red on the dayWithin minutes, I was up 5-7 cents on my short, but so what. The spread was ridiculous $1.72 x $1.77 so if I tried covering at the ask, I’d really only be up 2 cents. So I waited. A few minutes more and the stock bounced, but the volume remained weak and I was comforted by big sell blocks all in the $1.80, $1.81 and $1.82 range. Suddenly, a wave of selling hit, bringing the stock to $1.70 x $1.77. Ridiculous spread again.

I said to myself there’s only 4 hours left until the Fed comes out with some announcement that will influence the dollar and gold, would I want to stick around for that? Hell no, not in a less-than-ideal play that could also just keep going up gradually, squeezing shorts along the way like fellow $1 to $2 player MMTIF. So I put in a buy to cover order at $1.71, just above lots of big buy blocks at $1.70, the price that was resistance the day before (so theoretically should now be support).

Within seconds, I got my whole buy to cover order. I knew what that meant—it was going lower. Some market maker was glad to sell the shares I was buying at $1.71 because he probly had big sell orders that he knew would take out $1.70 and maybe more—considering then it’d be near unchanged for the day and probly go red.But I had my $180 profit, so I didn’t worry about it. It was a solid entry and exit and even though this stock continued to downtrend gradually until it really crashed to the $1.50 range as the Fed cut crushed gold prices meaning I basically left $500 in profits on the table, I was satisfied. Remember, I look for volatile stocks because since I KNOW my timing will be off, I just look to hop on and off along the way. Mission accomplished.

Today, I saw  

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A Solid Wussy Trade, aka Good To Do In This Kind Of Market

Forget the overall markets, today the biggest news was I began Twittering. For those of you who don’t know, Twitter is a messaging system where you leave quick little notes that can be viewed by everyone in real-time. Just gotta follow people—click HERE to follow me. Other than that, it was a slow day. That’s right I said it, what!

You gotta remember, my game, and the game I’m trying to teach everyone here, is PennyStocking, not this BS-macroeconomic-will-we-or-won’t-we-have-a-massive-financial-disaster-so-what-stocks-and-what-assets-should-we-be-long-or-short-depending-on-what-others-expect-and-when-they-expect-something-to-happen-or-not game everyone else in trading/finance is playing right now.

I, like the vast majority of you out there, am not smart, well-informed or rich enough to play that game, so I stay clear of competing against big-time traders, fund managers and stick to my little microcrap and smallcrap niche. Because outside of my niche, I have no edge. The odds are not on my side. Ever. And, today, my niche, was quiet.

Now, even though BSC, MF, LEH and the like all showed tremendous volatility —great for most traders—but I won’t even post their charts here because while their price action may be similar to that of PennyStocking , the factors and players behind them are vastly different. Anything, and I do mean anything, could’ve interfered with their intraday patterns—like a big hedge fund being forced to liquidate or a CNBC mention—neither variable I’d very concerned with if they were true penny stocks.

TIM Lesson: I trade hyped up and inefficient stocks played by small-time traders and investors moving due to market mechanisms, momentum or fluff news, not real companies played by the entire financial speculation community moving based on potentially disastrous or life-saving news. There is a HUGE difference

Don’t think for one minute I wasn’t tempted to buy some  

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