The market handed me my ass today. I lost close to $700 in about five minutes in a single buy, which was well beyond my mental 1 day loss limit, but I couldn’t get out of the position fast enough… Trading with this much buying power can be scary and it was an expensive lesson, but at least I managed to close out before my loss got too out of control.
So, I’m going to take a break from penny stocks for a couple months… I know I just started, but I want to reassess my strategy, do some more paper trading and maybe do a little swing trading on the side using the tried and true CAN SLIM method, created by the founder of the Investor’s Business Daily. I’ll still be posting, but I’ll be staying away from penny stocks for a bit.
Stocks traded (updated): SOMX, MRNA, LYJN, FAZ
Daily Profits: -$853
Here are the entries and exits for each stock:
SOMX: tried playing the dips on this one, but got it all backwards. Actually, the second buy would have been great, but at this point I was discouraged by my other trades kicking my ass so I sold and went back to bed.
LYJN: bought this one on it’s way up. Sold it on its way back down. I tried selling much earlier while I still had profit, but NITEFAN wouldn’t give me a fill.
FAZ: I’m not sure why I sold this one so quickly. I was probably pretty shaken up by MRNA going south on me. I should have had a bit more patience but I got cynical and started thinking that everything I touched was going south.
MRNA: This was my big mistake of the day. Bought at the high of the day. I thought to myself as I bought that it was breaking the premarket high so it was bound to go big. I think my mistake was I just put too much into the position when I take into consideration the risk of the buy.
Are you trading with WTC Trading now? I’m about to sign up with them and was wondering your opinions on them so far.
Anyways, hang in there. I am pretty sure everyone has losses like this early on in their trading. I remember within my first few weeks of trading I lost $800 on FUQI in a matter of seconds. If you want to share the stock/entry/exit on that losing trade I’d be interested in taking a look at it. I might be able to offer some advice as I started out playing the same stocks/strategy you are now. It’s definitely smart to take a step back. There are so many strategies and styles of trading and not all of them will fit your personality/risk threshold.
So far I’m loving WTC. They have a very responsive and knowledgeable staff who are available via Skype, email, phone before, during and after trading hours. I hadn’t done any direct trading prior to signing up with them, but quickly got the hang of determining my own routes. They have a list of suggested routes depending on if you’re doing market or limit orders and which exchange you’re trading on and if you’re looking for fastest execution or cheapest/best fees/rebates. Not paying a commission per trade is incredible and the ECN fees turn out to be a lot lower than I expected.
I initiated my first withdrawal from WTC yesterday. They say to give it 3 to 4 business days to process, so I will be posting my experience with that when the transaction is complete. So far, the process has been simple. Just a quick wire transfer form to fill out on their website.
Thanks for the words of encouragement! I will be back in the saddle in no time. I’m rolling my 401k accounts into an IRA so I can trade with that using CAN SLIM and the IBD for more long term type gains.
There are a few caveats I wasn’t aware of until I spoke with them on the phone as I was opening my account:
They just started allowing OTC/pinks through the NITEFAN route. I used this route several times over the past week and it seemed a little slow to me compared to the ARCA, EDGEX and NSDQBX routes I was using to trade Nasdaq, even in stocks with a lot of activity.
They give you 10 to 1 buying power for anything over $5. Only 2 to 1 for anything less than $5. That’s fine by me, but I didn’t realize it till I got on the phone with them.
Overnight buying power is 4 to 1 I think, with a max of only half of that in one position. Anything you hold overnight, you have to get approval with them. That process starts at around 30 minutes before market close. I don’t usually hold overnight, so that didn’t matter to me.
They don’t want you putting all your buying power into one position. I think they cap it at 1/2 your buying power into one stock.
The minimum risk capital balance they allow before they start closing you down is $2000. At that point you have to deposit more if you want to continue trading with them.
All of this is to limit their risk, and is completely reasonable in my opinion. They’re very communicative and will always try calling/chatting/emailing before they take any action. For instance, if you’re holding a position overnight and you haven’t cleared it with them, they will contact you at 3:30. But if they haven’t heard from you by close to the close then they might sell off the positions that weren’t cleared.
Hope that info helps.