Last time, I posted about my successful trade with HSNI and un-successful trade with ABK. Since then, 3 trading days have passed and here’s what I did in those 3 trading days.
On Friday, I was watching SPAR. I was watching Google Finance and saw that Sun Microsystems (JAVA) announced their earnings and reported big losses. I looked at the yearly chart of JAVA and found that whenever it reported loss in earnings, stock dropped the next day. I added JAVA to my short watch list.
In morning, JAVA started cracking and I shorted 500 shares of JAVA at 4.76. Here’s the action detailed on the chart itself.
JAVA Trade 31st October
At one point, I was 100$ up on my JAVA position but I did not close. I think I was highly influenced by Torello’s method where he would hold short over multiple days and pocket very nice gains. When I mentioned JAVA to him, he told that multi day short idea doesn’t really work that well with these big name companies. Possibly, the weekend also influenced the stock movement. I think my initial trade was right, and I should have avoided holding over the weekend. And in any case, when JAVA gap opened on Monday, I should have sold it off instead of waiting for gap to fade. Well, lesson learned.
Next, SPAR. Here’s the timeline.
SPAR Trade 31st October
Once again, I thought that this stock will be a slow bleeder. But it did not bleed and instead of covering on Monday, I covered on Tuesday for much higher loss. I think I have opposite problem as Yng. Yng feels that he doesn’t give enough room for trade to breathe where as I am giving way too much breathing room. Well, we both need to work on this.
Next, HSNI. Here’s what I did.
HSNI Trade 31st October
Once again, I was thinking that I will apply Torello’s strategy but stock was behaving erratically. I got out at 50$ profit. I was upset because had I not hold it over night, I would have made 400$ on this short. What is more frustrating is that after I got out, HSNI did go down further, it closed today at 4.97$. I am not sure how I could have traded better. Any ideas?
Finally, I traded ABK. When ABK went red to green yesterday, I went LONG 1000 shares at 3.40. ABK touched HOD of 3.58 and kept hitting resistance at 3.50. I decided to get out at 3.50 for 100$ profit. ABK then went as low as 3.2 and closed at around 3.4. I think this was a nice trade. As I discussed in my last post, it could be a good idea to trade a single stock every day. You can capture these small movements (10 cents/share) and those could be nice gains. [Side note: TRO himself commented on my last post! I don’t know why he felt that I was against the idea and was giving up on it after only one try.]
For ABK, I really wish TOS would give easy borrows. ABK has plenty of scalping opportunities but as you can not short it easily, I can’t really trade it. I am going to contact TOS and find out how do they decide whether a particular stock is easy borrow or not.
And yes, I also contacted the TOS support about the high commission I got charged for my last ABK trade. The support personnel told me that I got charged high commission because I used the STOP order. The low fees are only applicable to Market orders and LIMIT orders. Also, he suggested that TOS chooses the best possible commission structure ONLY if you select ‘Flat Fee Structure’. Let’s say you are entering a trade for which Flat Fee will cost you 9$ and per share commission will cost you 8$ and if your default setting is ‘Flat Fee’, then it will go for ‘Per share commission’ structure on the fly and save you money. On the other hand, if your default setting is ‘Per share commission’ and your trade will cost you 15$, it will not switch to Flat Fee structure and save you 6$. After learning this, I have set up my TOS to always use Flat Fee Commission. Did I tell you that TOS rocks? I don’t think I have experienced this kind of customer service in my entire life. They totally deserve their 9$ commission in my books.
Status as of end of Nov 4th:
Positions traded for Gain: HSNI (35$), ABK (100$)
Positions traded for Loss: SPAR (274$), JAVA (89$)
2 responses so far ↓
1 YngvaiMalmsteve // Nov 6, 2008 at 10:47 pm
A few things:
1. On JAVA, you’ll notice you had a 10/60 cross to the upside in the afternoon. That would’ve been a good signal to exit and take your profit.
2. I wouldn’t have shorted SPAR where you did. You can see that both trendlines are pointing up, which is an indicator of strength, not weakness.
3. For HSNI, a $6.40 to $5.60 drop is a 14% return on your position. In cases like that, I’ll always take the profit. Also, HSNI is reasonably correlated (60% green/green) with the NASDAQ index, so in a situation like that, it’s best to close and not hold overnight as you don’t know what the whole market is going to do the next day.
I’m getting in the habit of checking the correlations with all 3 major indices (Dow, S&P, and NASDAQ) as some stocks may be closely tied to one but not the others.
2 RJ // Nov 7, 2008 at 2:24 am
Yng,
Thank you for the input. Responding to your points:
1. I don’t think I pay attention to 10/60 anymore. Only thing I am looking at is price and volume. I will create another post about it.
2. In SPAR case, I agree that those trendlines would have been useful. Will keep that in mind.
3. This is another thing I need to work at. Should I set % gain for my trade and exit there OR should I watch the trade and see if it’s working in my direction? See my next post for more thoughts on it. I am still not sure what will be the best way to go.
Anyway, I really appreciate your input on my blog as well as informative posts on your own blog. They are very helpful.
Thanks!
RJ.
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