Thursday, October 25, 2007

FLML ~ My favorite mistake

FLML is my favorite mistake, for the day anyway. This day trading is not for the timid or weak of spirit that is for sure.

As you can see by the chart below, I bought in around mid day (when I thought price would be good) at 11.17. It proceeded to head south, and then kept bouncing up to just under my price, and then go down again all afternoon. Disheartened that my timing was so poor, I stupidly put a sell order in for just a bit over my price at 11.23. Since there was at resistance at 11.25, I figured I would get a sell in before it bounced down again, in case I missed it.

Well, it worked in one way, that I did make 6 cents a share. The only problem is that had I not had that sell in I wouldn't have even see it hit 11.23 as it blew past it on it on the way up to the 12.75 area. I missed out on an additional 1.50 per share profit at least, on the sell side, and 40 to 50 cents on the buy side as well, had I been more patient.

So, the rainmans advice to me (thanks goingin60) was

"the mkt trades best 8am-10:30 then 3 pm to 4 pm-
itll be in my book-
Rainman 101 for daytraders"
You can see that had I purchased this stock anytime between 8 and 10:30 and sold anytime on the way down off of 12.75 I would have maximized the profit and made much more than 6 cents on this trade, making it worth the round trip I took.

So, if I am going to learn to play these momentum stocks, I think that I need to make a few adjustments to my strategy.

First, I need to get up at 5 am instead of 6. I am not getting up and running quick enough to get in on the ground floor of these momentum moves. Next, I need to choose one stock to follow the momentum of for the day, and try to get in before 10:30 (7:30 my time). Third, watch throughout the day, but I need to assume the sell point is going to happen either the between 3 and 4 that day, or the next morning. Lastly, do not make the buy and sell on the same day unless there is a doubt that it will hold up for sale in the am.

Now, for the 4 short term trades I am still holding, and at a loss.

EGHT: Went up 5 cents in after hours, so it is down 2% since I purchased it at 1.48. It has to break resistance at 1.52. Earnings are being released on November 1, next Thursday, after market close at 4:30. I feel at this point I may as well commit another week to this stock to see what earnings release gets me. I'm a little nervous with the after hours release time. However, if this makes any kind of run past resistance at 1.52, I will

GNVC: Up 4 cents in after hours to 2.50, down 6% since my investment. This one is posing a difficulty for me to exit. While it has been trending mostly downward, it is staying above the support at the 50 day moving average. I don't even care about losing some money on this one at this point. I just want to minimize the loss the best I can. In fact, now that I have typed that out, I realize that the loss I would take at 2.50 is acceptable to me at this point, so I have put a sell order in for that amount. If it clears, I have one less stock to track, if it goes higher, oh well. I have no signs pointing to any upward momentum on this stock. Part of me would like to put the sell price at 2.55, as it has been at or above that price the past few days, however the more practical side of me says I don't want to lose the opportunity to get this one out of my portfolio over 5 cents.

NCST: Currently my biggest headache. No action, no news, the chart looks horrible. I am down 16% on this one as it stands at $2.31, and I have no support again until 2.16. I've got resistance at 2.50 and 2.63, and I have to get up to 2.75 just to break even on this one. To add insult to injury, this is the largest of my 4 short term investments that I have had longer than I anticipated, and I have no idea how to divest myself of it. Interestingly, 75% of the shares of this company are held by insiders or 5% owners.

TVIN is my last. It is down 25% since I bought it, and the chart doesn't look too hot. Earnings release are out on Nov. 8th, so 2 weeks from now. It's late, and I need to go to get up early, so I'll look at this more tomorrow.

Always perform your own due diligence before making any investment.

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