Well, I am still here. Due to few personal issues, I couldn’t really post updates even though I have been trading on and off and watching market everyday.
Here’s the update on my trades since I put up a post on Feb 26th.
I have had both winners and losers but my losses were huge and winners were small. I lost 2000$+ on my SRS and FAZ positions. After the major setback, I decided to stop trading these ETFs. These losses made me realize why Tim doesn’t play these ETFs as well as those high volume stocks. As a beginner trader, you have absolute no edge what so ever against the pros.
After making the decision to not trade the ETFs, I was doing better. On April 1st, I shorted SAH after they reported horrible earnings. I think I made good 10% on the trade. Later on, SAH reached 1$ from LOD of 0.72, so I reshorted 2000 shares of SAH thinking that it will not be able to crack 1$. I did not cover my position on that day and decided to hold the position and wait for SAH to crack.
Well, SAH was hovering around 1.10$ the next day and I was quite comfortable holding it. Suddenly in the last session of the day, it moved to 1.20$. I was very surprised and I started wondering whether I should cover it or not. I checked fundamentals of the company and foudn that they have billions of dollars of debt and they are in auto industry. I decided to hold little longer. [Isn't it amazing that as soon as I am in losing trade, you start finding reasons to stay in the trade?] It has been roller coaster ride since then. SAH never got back to 1$ again. As of today, April 14th, SAH closed at 2.35, hitting high of 2.74! I am currently down by 2700$ (more than 100%) on this position! 
The worst part is that these losses made my account balance fall below 25k and IB is not letting me re-short it.
I have still decided to hold it as GM bankruptcy is looming and auto sales have been dismal. I think SAH is mainly spiking because of the short squeeze. I want to short this bugger when it shows little weakness (already, the volume is steadily decreasing everyday.).
This is all for now,
I have few thoughts about what I did wrong and what I should be doing next, I will make another post about it.
Trade well,
RJ
7 responses so far ↓
1 Yngvai // Apr 14, 2009 at 8:01 pm
Hey, RJ,
Like you, I stopped trading the ETFs and have done much better.
Holding your current SAH short position is very risky. If you look at SAH’s 52-week chart, it’s found a pretty solid bottom at $1. I doubt it will make its way back to $1 any time soon.
2 Charlie G. // Apr 15, 2009 at 11:46 am
Glad to see you back. I have not advice on your positions as I barely make profits still on my paper/practice trading!
Hey, any idea where IL Torello is?
3 RJ // Apr 15, 2009 at 6:34 pm
Yng,
At this point, I am not looking to make money on my SAH trade. I want it to come down so that I can get out with minimal loss. The biggest problem is that I may not be able to short SAH when it starts breaking down again.
Charlie,
Thanks for your comment. I don’t know where Torello is. He was very good at trading and I learned a good amount from him. I will leave comment on his blog and see if he plans to return.
4 sJ // Apr 15, 2009 at 7:19 pm
Why dont you use stop loss still beats me….
5 RJ // Apr 16, 2009 at 5:57 pm
sJ,
Let’s just say that I am an idiot for not using stop loss. This is going to be my first rule as soon as I get out of this mess and start trading again.
6 sJ // Apr 16, 2009 at 9:04 pm
SAH is 3$ now…u might have to wait a long time to get even with it…SAH is breaking through critical resistance…be careful and plan an exist strategy…
anyway good to know u stopped playing FAS/FAZ…and other crazy 3x ETFs…
good luck trading…
7 Yngvai // Apr 16, 2009 at 11:38 pm
Yeah, RJ, I would agree with SJ. If you look at SAH’s chart it’s formed a double bottom at $1 and it’s looking bullish. There’s a good chance it may never find its way back below $1 (or even back near it), and if it does, it might be a very long time.
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