When does a series of mistakes become a strategy?  When the ninja survives it and can adapt for the next encounter.

On 6/18, I cleared a day trade on $FAMI and made $1,249.42.  Happy days, right?  Here was the 15 minute chart for that day:

That morning pop was because of some positive news for this low float stock: they received new orders.  The stock moved from about $0.56 to $1.81 in the pre-market.  If I recall correctly, I didn't start looking at this until just before lunch based on looking at my scanner.  I was trying to get the next dip but after jumping in the volume kept fading and I traded scared and just got out.  It is also important to note that I was flush from my $MFA haul just two days prior, so I was looking for my next score.  Like an addict, I wanted another big hit so I bought 25,000 shares at $1.00, basically tying up $25,000 just to end up making a little over a grand when I sold.  This was mistake #1: jumping into a trade without proper analysis.

First question, was that a good move to get out when I did?  One does have to put up money to make money in the stock market.  The question isn't necessarily how much I invested versus how much I made.  At this point, it is quite rare for me to make high percentage returns.  My average gain is 7% right now and this trade was a 5% gain.  The question, therefore, is better posed as how much was I willing to lose compared to how much I wanted to gain?  As in, when did I plan to cut my losses?  So in the trade on 6/18, I believe I exited well by getting out when the volume kept dropping as the price was leveling out.  I wasn't willing to lose anything on that trade that day.  My entry, of course, was not ideal at all.

However, once I made the right decision to jump out I didn't pause as I should have after making that thousand dollars.  Instead, again like an addict, I wasn't happy with the action and thought I deserved another big hit like I got with $MFA and before the day was over, I jumped right back in but this time for 30,000 shares at $0.87.  Surely, the next day this will bounce back, right?  This was mistake #2: acting like the market owed me for my failed analysis.

Fast forward to 8/14.  I won't go over all the days in between of being trapped in the position, second and triple guessing, unable to trade other setups, and desperately putting in pre-market and after-market hopeful sell orders to get out.  I'll just show the daily chart from 6/17 to today:

So, what was the reason for the jump today?  Same as 6/18, they received some good news which actually was a repeat: they received new orders.  Just for that, the stock went from about $0.75 in the pre-market to $1.67 by the afternoon.  Here's the 15 minute chart for today:

Now, by this time I'm definitely not wanting to waste this opportunity.  I saw the jump pre-market, had a pre-market sell order waiting, and had my trailing stop order for regular hours prepped.  If my pre-market order didn't get filled, the plan was to wait for the price to hit $1.27 and then let the $0.05 trailing stop do its thing.  That would have netted me $10k.  But..... I happened to be on a previously planned phone call soon after the market opened and was distracted.  This was mistake #3: not maintaining proper focus for the end game.

So yesterday morning I had divided attention on the day I had been waiting for and when my call started I'm up $7k.  Because my attention is divided I didn't want to have to wait any longer to get out, I saw volatile trading, and things started to fade within 45 min.  This is what I saw in the one-minute chart right up to when I jumped out:

What would you do here?  You see big volumes compared to the prior two months, you see large swings where you go from being up a few thousand to about ten thousand.  When do you exit?  Do you think it will jump higher?  You can see it fading for longer periods and then very short jumps.  Is that a signal for weakness or strength in the action?  For me, I wanted out and I couldn't fully concentrate on the Level 2.  At one point, I saw over 100,000 shares at one sell price point for a few minutes and when it didn't get hit, it was moved downward.  So I'm thinking there's a retreating wall and I don't want to watch all my gains evaporate and be stuck yet again.  Right when the next two green candles occurred, then, I sold for a profit of $5,699.30.  

To summarize, this is an example of several mistakes which just happened to end in profit.  It could have easily gone the other way.