Today I traded $CLDC based on the fact that this stock was gaping up way too much for not having any significance news and the fact that this is a stock that fits in to a specific strategy that I try to become better at. But as I've learned from last week that a stock can run much further than you think even though the stock has no news. It's enough that it's in a hot environment and your expectations can be blown away. And due to this very important insight I told myself early in pre-market trading that this week you are absolutely not allowed to trade ANYTHING in the pre-market hours unless it's one specific strategy, and this wasn't that strategy so I simply stayed away from the chart until 9:15 ish, to not get emotionally attached/ tempted to trade it in its pre-market actions. I was also watching $ALT and had the same criteria's formed for that potential trade. But $ALT basically died pre-market due to an offering, leavening me with only "CLDC" as a playable setup. 

 

But as I said I wanted to wait for the market to open and for the stock to show me where it was going to go and where it was going to top out. I had a briefer idea of where this "should normally" top out by looking at some statistics that I have on this specific setup. But the statistics that I have doesn't consist of enough samples for me to be sure that the numbers it prevents me are trustworthy enough to base a whole trade of. Therefore I waited for the first rejection to come, and to short into the first bounce. At first the risk level was the HOD $2.76, as I took my starter at $2.41, but I then quickly realized the pressure on the level2 and the fact that the bid side was getting weak, and decided to double up on my position with the criteria that if this wasn't going to be the drop I was going to cut out (cover) those shares that I just added, if we got over that stuffed bounce attempt. 

I did set this as a plan because if we were to breach that stuffed bounce my thesis in relation to my add wasn't intact anymore.

 

But it turned out that my thesis was right and we were now dropping, I decided to take 1/3 of right away as we just briefly touched $2, due to the potential psychological aspect of the round number. Then I tried to stay patient with the rest to see witch pre-market support level that were going to be of importance. I ended up covering another 1/3 at the $1.91 area as I feel the need of scaling out since this was one of the first time I traded this setup. And due to the fact that I didn't really knew what to expect from the stock in terms of how big the potential AVG gain is with these type's of plays, and that I, therefore, wanted to make sure that I locked in some early profits. 

I ended up covering the last part in the $1.93 as the low $1.9 defended again and we were heading towards 10 AM, which has been known for the last week being a real pain in the ass for shorts, there has been sooooo many "zombie" stocks/ manipulation going on in the midday. And to be honest I also just wanted to get out to not get stuck in a potential bounce.. Because I wasn't mentally prepared for that.

 

Key takeaways from this trade:

1. Understand what habits aren't good for you and work to overcome it.

2. Get out of the comfort zone

3.Understanding your restrictions

4. Understanding that it's a process of a marathon, not a sprint.

 

Background: 

Things that I did well:

1.stayed away from pre-market trading - I noticed that last weeks trading had created a toxic behavior of trading in pre-market, And to overcome this behavior I came up with the solution of not looking at the chart until just before open, 

 

2. Getting out of the comfort-zone - the fact that I took the courage to really believe in myself of picking the right stock and trade it even though this wasn't my bread and butter setup. 

 

3. Understanding my limitations - I want to give myself props for understanding that I didn't really have an edge in this play as of terms of market experience or statistics that could tell me when to cover. And that I due to that reason decided to rather be safe than stupid and greedy, and to see this one play as the introduction to this setup, and that I didn't need to make thousands to feel great about the trade.

 

Things to improve on:

4.Not locating more than I need - hehe.. I located way too many shares just as we started to spike at open, and now in hindsight that is something that I have to work on, especially on these setups that I haven't really traded before, I have to remember myself that the first couple trades on a setup are practice and that those should be done with SMALL size!  

 

 

Monthly goal: start to believe in yourself and your pick rate.

Grade: A

Motivation: I get an (A) due to the fact that I got out of my comfort-zone and executed a trade that I wasn’t super comfortable with.