Today's trade or Lesser Losses
In case you can't tell from the title, I nearly got mauled by the bears today. I caught the fact that TMTA (a chip maker) was announcing a new deal with Sony. I read the chart and it looked good. The stock opened up quite a bit and was rising as I placed my order for 1000 shares. I got 'em too, at $2.20.
So, of course, the stock peaked at $2.22 and proceeded to fall literally with the next candle on the 1 minute chart. Darn thing huddled around $2.14 to $2.15 all day, until around 2 PM when it dropped a penny and stayed in that range. Now, of course, at this point, being a mom, I have to go get the kids at school and then my oldest had an appointment.
So I did what one should never do. I left the position, figuring (hoping) that the stock would recover when the bond market closed at 3 PM. I got home at 3:30 PM and found that the stock, ever pernicious and unpredictable, had dropped to $2.08. Then $2.07.
At this point, I'm wondering what the heck to do.... with a $0.13 loss per share. I did something kind of risky. I bought 2000 shares... first trying to get them for $2.07. I got it at $2.08.
What this served to do was bring my average cost per share down from $2.20—which the stock probably won't see 'til August, if ever—down to $2.12, which I could theoretically get. I say that I could theoretically get this by looking at how much stock was available for sale at the various prices between $2.08 and $2.12. It was possible to "make it back" to $2.12... whereas getting back to $2.20... millions of shares. Yeah, it could happen. But for me to make a profit with stock bought at $2.20 (say at $2.25) TMTA would have to breakout over a level that it hadn't hit since like 2002 (on the way down). $2.12 was possible. $2.25 wasn't happening.
So, for the next half hour, I chewed my nails, changed the sell order as the price rose. For a single moment, it looked like I might get $2.13 for the whole lot and actually MAKE money. But then the stock dropped back. Sold 1900 shares at $2.12 (breakeven not counting commissions). Then about 2 minutes from the closing bell, I gave in and sold the remaining 1100 shares at $2.10 for a $33 loss (not including commissions).
So, while I am still down on the day—and a heck of a day it was, at one point, the DJI was running at -$93—I am way less down than I could have been, $33 versus $120. But did I trade well? I can't decide. I suspect I should have known that a stock that gaps open on good news will fall. Of course, it didn't happen to AAPL, which I didn't buy yesterday. So, this must be one of those rules that are always true except when they aren't. But then, once I was in the bad trade, I held it. I don't feel great about that. Maybe I should have bailed earlier in the day. But then when the stock went down again, I did something really risky that paid off... but it was about the only thing that could be done, because sitting tight was a sure, big loss. And it paid off.
No, I'm not making excuses! I'm explaining what I did.
I lost $33 instead of $120 and was flat at $29,854 at the end of the day. It coulda been worse. Next time the bears are out, me and my Grape Nuts are gonna stay in the tent!
Harsh Lesson #4: Buying on a gap open can be a good idea. Buying on the dogi of a gap open (like I happened to do) is a WAY BAD IDEA.
So, of course, the stock peaked at $2.22 and proceeded to fall literally with the next candle on the 1 minute chart. Darn thing huddled around $2.14 to $2.15 all day, until around 2 PM when it dropped a penny and stayed in that range. Now, of course, at this point, being a mom, I have to go get the kids at school and then my oldest had an appointment.
So I did what one should never do. I left the position, figuring (hoping) that the stock would recover when the bond market closed at 3 PM. I got home at 3:30 PM and found that the stock, ever pernicious and unpredictable, had dropped to $2.08. Then $2.07.
At this point, I'm wondering what the heck to do.... with a $0.13 loss per share. I did something kind of risky. I bought 2000 shares... first trying to get them for $2.07. I got it at $2.08.
What this served to do was bring my average cost per share down from $2.20—which the stock probably won't see 'til August, if ever—down to $2.12, which I could theoretically get. I say that I could theoretically get this by looking at how much stock was available for sale at the various prices between $2.08 and $2.12. It was possible to "make it back" to $2.12... whereas getting back to $2.20... millions of shares. Yeah, it could happen. But for me to make a profit with stock bought at $2.20 (say at $2.25) TMTA would have to breakout over a level that it hadn't hit since like 2002 (on the way down). $2.12 was possible. $2.25 wasn't happening.
So, for the next half hour, I chewed my nails, changed the sell order as the price rose. For a single moment, it looked like I might get $2.13 for the whole lot and actually MAKE money. But then the stock dropped back. Sold 1900 shares at $2.12 (breakeven not counting commissions). Then about 2 minutes from the closing bell, I gave in and sold the remaining 1100 shares at $2.10 for a $33 loss (not including commissions).
So, while I am still down on the day—and a heck of a day it was, at one point, the DJI was running at -$93—I am way less down than I could have been, $33 versus $120. But did I trade well? I can't decide. I suspect I should have known that a stock that gaps open on good news will fall. Of course, it didn't happen to AAPL, which I didn't buy yesterday. So, this must be one of those rules that are always true except when they aren't. But then, once I was in the bad trade, I held it. I don't feel great about that. Maybe I should have bailed earlier in the day. But then when the stock went down again, I did something really risky that paid off... but it was about the only thing that could be done, because sitting tight was a sure, big loss. And it paid off.
No, I'm not making excuses! I'm explaining what I did.
I lost $33 instead of $120 and was flat at $29,854 at the end of the day. It coulda been worse. Next time the bears are out, me and my Grape Nuts are gonna stay in the tent!
Harsh Lesson #4: Buying on a gap open can be a good idea. Buying on the dogi of a gap open (like I happened to do) is a WAY BAD IDEA.
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