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
Covered my CAB short at 8.40 for a loss of 700$. And as soon as I covered, stock tanked and closed at 8.12!
Also, did a small trade with DRYS, lost 15$ or so.
The last two days has seriously impacted my confidence and I think I need to re-evaluate everything.
I am not sure if I will be trading today, if I do, will post an update in the evening.
Trade Well,
RJ
P.S.: As I am watching pre-market action right now, FAZ is back at 65$!
I forgot to mention one thing in my last post about RMBS trade. After I shorted RMBS and it started spiking up and market was also going up dramatically, to hedge against my position in IB, I went long 400 shares of RMBS at 9.5 in my TOS a/c to hedge against my IB position.
So far here’s what I have done:
1. Closed RMBS in TOS at 9$ for 220$ loss.Covered my RMBS in IB at avg. price of 8.72 for gain of around 100$. Net loss of 120$.
2. Covered PALM at an avg. price of 7.31 for total gain of 200$.
3. Shorted HIG at 7.3 (only 250 shares), covered at 6.79 for gain for 120$.
4. Shorted 1000 SFI at 1.35, covered at 1.25 for 90$ profit.
5. Shorted DRYS at 3.8, covered at 3.79, loss of commissions.
6. I shorted 500 CAB at 7.7, covered at 7.64 for a small gain. I reshorted 500 CAB at 7.51 and covered by order entry mistake at 7.74. Again shorted 1000 CAB at 7.71
7. LONG FAZ from 60.5 to 61.52, gain of around 49$. Currently LONG FAZ 150 shares at an average price fo 62.21.
I will update this post again at EOD.
Trade well,
RJ
Update:
I fucked up. Couldn’t take the pain of FAZ tanking, got out at huge loss wiping out my mornings gains. In total, down by 1332$ for the day!
I am still holding my CAB short. I am currently down on it by 400$ but I think it should come down in day or two.
2nd Update:
Well, what would you know, FAZ moved from 50 to 56 in last 30 minutes! I need to start fresh.
Few mistakes today:
1. Went short RMBS even though I was planning to play it LONG. I went SHORT because Muddy in the chatroom said he is going to short it. I couldn’t go LONG after that and I got confused about the price action after that. Mind you, I am not blaming Muddy for this. He shared what trade he was doing, it was my fault that I didn’t trade as per my plan.
2. Getting spooked out of WFC too soon. I was long at 11.80 but couldn’t handle the little dip to 11.50. WFC closed at 13$!
3. Waiting on the sidelines instead of going LONG on FAS. After Bernake’s speech market was ripping but for somehow I am very bearish and couldn’t get myself to go LONG on FAS. Again, I need to work on myself and ride the momentum as I see it.
Status as of end of Feb 24th:
Positions closed for Gain: CAB (29$), FAZ (44.51$)
Positions closed for Loss: WFC (-75.75$)
Open Positions: PALM (1000 @ 7.52), RMBS (800 @ 8.72)
1. CAB – It moved from 6$ to 8$ based on earnings news. CAB is a specialized retailer for hunting, fishing and other related products. Today, it didn’t really come back down, but I think it should give back some of this massive 2$ move tomorrow. Another nice thing about the stock is that it forms an intraday trend slowly and surely. Gives me room to enter in a trade.
2. PALM – islandminister has a very nice blog titled ‘Trading to fund Mission Trips’ where he tries to short what Tim describes as ‘SuperNova’. His latest post about PALM reading is excellent. I agree with his analysis and I will be ready to short PALM based on the price action.
3. DRYS – Another stock which trends slowly but surely. It can be either a LONG or a SHORT.
4. AIG – AIG wants to go to zero. For some reason, I am finding it really hard to short AIG. I have the psychological barrier against shorting a stock which is already 50 cents. I need to get rid of that barrier. Based on the price action, I will try to take a very small position (say 500 shares) and short AIG.[Other insurance companies worth shorting are HIG and PRU. I think PRU is also a very high probability short.]
5. FAZ/FAS – The best stock to trade tomorrow. I am thinking there could be another sell off OR a rally. Either way, I don’t care. I am just going to jump on either FAZ and FAS train and make some money.
The biggest thing in this market is to realize that ANYTHING can happen and keep your mind open. I am still not there. I try to decide a lower limit for stock (e.g. AIG) or upper limit (e.g. FAZ, I thought it won’t go to 79$ today). It’s important to let go of any pre conceived notion and only trade the price/volume action.
I will also watch pre-market gainers and trade if there is right setup.
Trade well,
RJ.
