Friday was my biggest losing day in the 2 weeks since I started trading again, after 14 months of losing a total of 15K trading Blue Chip companies. 

 

The problems all started when I watched DRWI on Thursday. It was up 95% on the day, it was upgraded overnight after it announced a contract with Sprint. I was looking at the stocks statistics and noticed it had a float of only 4.88M and it only has a market cap of $23M. The stock had traded over 22 million shares that day before I bought it. This was where I should have become aware already. I just did not think about it, because I was too excited to get in this stock and was scared to miss any potential move, this was a big mistake!! A volume of 22 million in one day with less than 5 million in float is 4 times the available shares traded that day. I should have already be cautious with that big a volume in one day.

Anyway, I was quickly reading through an article on Yahoo Finance regarding the contract win and analyst upgrade. In between I kept an eye on where the stock was going as it went from the 4.20's where it had some support to 4.30/4.40. This is when I forgot about everything and I just clicked buy as I thought it could go back to the HOD at 4.70 and I could make a quick 10%. I bought 300 shares at 4.38 only to see the stock come down to the 4.20's. this is where I should have sold, but I was too cocky and confident that it would see the HOD again. The stock went below 4.20 and instead of cutting losses, I decided to avarage down, so I bought another 200 shares at 4.18, moving my avarage down to 4.30. Now I was in with 500 shares and when it went even down to between 4.00 and 4.10 I should have cut losses. I still didn't cut any losses and the stock went back to the 4.20's. I was able to take off 200 shares at 4.25 for a $10 loss. I felt confident and figured the stock would go up higher in the morning, so I kept my 300 shares at 4.30 even though the stock went to the 4.40's in after hours. 

I reviewed what I did, but I was reviewing it in full excitement, because I thought I was doing the right thing by holding, because I only lost 10$ and at one point I was down $130. I was not aware of the fact that what I was doing, would kill me in the long run. So on Friday, I looked at the stock in pre-market, and noticed it was still around the 4.30's. I was still confident it could go up, maybe not the 4.70's but I figured 4.50 for sure, so I held on to my shares. It went down to the low 4's and opened at 4.35. Within moments the stock went back to the low 4's and I still did not cut losses. It finally moved to the 4.50's and I sold my 300 shares at 4.49, with an avarage sell price of 4.42. 

 

Clear to see the mistakes I made. I got lucky that one time, but this is not sticking to a strategy. It's using hope as a strategy.




So, I was really relieved to finally be out of this stock and I decided to just not trade any more until Monday. I needed to review what I had done over the weekend, so that I could start fresh again on Monday. 



But later that day I opened my laptop and was reading through all the messages in Tim Sykes's chatroom. I remember BTUUQ from earlier that day going from the high 6's to the mid 8's and I was actually looking to short at that time. The stock never did what I wanted, so I stayed away. But in the afternoon the stock was trading near it's HOD at 12.15. I actually wanted to buy the breakout at 12.15 with my stop at 12. I figured the stock could go to the 12.50's so that would be a nice 3-1 risk/reward. I missed the breakout and was watching it go from 12.15 to 12.50 and then saw it failing at 12.50. Right at that moment it was up over 100% on the day and I thought this could be a nice short, since it's been trending higher all day. I couldn't find any shares to short, so I thought it could bounce from the low 12's and retest the 12.50 level. I bought 100 shares at 12.10 and was willing to go out at 12. BUT it went below 12 and like I did on DRWI, I did not cut losses. I watched it go below 11.50, then go below 11.20, then go below 11, then go below 10.80 and I finally got out at 10.50. All these levels were potential support levels, but there were just way too many people taking profits and short sellers stepping in. 

After this loss I stayed away for the rest of the day, because I knew I had to get my mind straight. Now that I am reviewing my last two trades, I can only come up with one conclusion: HOPE IS NOT A STRATEGY!!!

I would buy, then watch the stock go down and crack the support I was willing to sell, but would not take any loss. Eventually my loss would be even bigger than my winners, because I did not cut losses quickly. Also I think that I just overtraded, trying to make a big profit and grow my $1500 account quickly so that I can tell everyone how great I am. This was a mistake, there is no short cuts in this business. 

This is just terrible loss management. I was already past the point of risk management. Terrible, terrible, terrible, terrible, terrible, terrible, terrible, terrible!!!

 

In the past when I was trading Blue Chip companies, I used leverage. A trade like this would have probably wiped out my account completely and I would not be able to trade anymore until I funded my account again. One of Timothy Sykes his rules is to not use leverage. I am trading with SureTrader and I have a 6:1 buying power. But before I enter a trade, I look how much I can buy with the money I actually have and not the buying power I have. I think this is why a huge loss in my opinion on BTUUQ feels so terrible to me, but I can still continue to trade, because I traded with the money I have and not the buying power provided. I need to stay focussed and only make 1, 2 or 3 trades a week and be a sniper again. I feel like I started off really good in the first week of trading, but I got caught up emotionally after DRWI and this had let to my big loss on BTUUQ. I am glad I lost on BTUUQ, because it opened my eyes to what I was doing. I handled DRWI terrible, but did not feel as bad as with BTUUQ because I did not really loose any money on it. BTUUQ I did, so I guess Karma is telling me to quit being stubborn and go back to your strategy as I have learned from Tim Sykes's DVDs. 

 

I will be studying for the rest of the day and go back to be a sniper and prefer missing a trade, than chasing it!

 

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