Trade The Journey

Trade The Journey

Taking the Trade!

Top of the Morning.

I received the first of two vaccine shots this past week, and I feel about normal. My shoulder is still sore in the area where I received the shot. Besides a bit of discomfort, I feel good; in fact, I ran a few miles at the beach the same day I received the shot.

I read and hear many conspiracy theories regarding the shot, but I also have a few family members who succumbed to the Coronavirus. Gasping for air, infected with the virus, is not a pleasant way to leave this earth. With other health ailments, I face an increased risk of being hospitalized, so not receiving the vaccine isn’t an option.

Driveshack:

Since I have a small account size, I have to be selective in the stocks I choose to trade. Unfortunately, trading some of the more highly valued names requires a more significant capital size. If the stock were around twenty dollars, I’d be able to trade ten to twenty shares at max.

The way I think about it, if the price moves one to two dollars on a twenty-dollar stock, that’s about twenty to forty dollars on the move. But a stock below ten, I’d capture more profits.

Drive Shack caught my eye because it was below ten and had a high amount of daily volume. I watched this company for a month, and I thought it was poised for a move. Still, I wasn’t convinced to enter the position. I needed more confirmation, so I kept searching for information.

The only reason I entered the position is because of the encouragement I received from the material of Mark Douglas and Linda Raschke. Mark Douglas, in particular, emphasizes in his seminars that knowing the outcome of each trade is near impossible. Over a series is where you see your edge produce results.

On Sunday, when I typically complete my homework, I decided that this is the position I would open on Monday.

 

Entry:
I picked the point of $3.28, which was the low on Monday, but as the stock rose, I moved up my entry point. I was worried I wouldn’t get filled. I wanted to be in this trade, so I moved my limit order up to $3.43, which proved to be a resistance level. I didn’t notice $3.43 as a level until the next day when the price kept close to this area.

 

 

My entry was just above the resistance line.

 

Trade Management:

I almost closed the position a couple of times because of fear. The day after I entered, the stock pulled back to test the support line and barely bounced off. I was nervous, but the next day was bullish. With my profits, I wondered whether I should close the position. I kept my position open, figuring I’ll let my profit runs. The truth is I had no profit target for multiple reasons:

Delusions of Grandeur
I kept replaying this scenario of windfall profits, which clouded my vision on the likely move next. The stock price was the highest since January of this year; people were going to sell to take profits. The low in march was under a dollar. It could go higher
You never know what could happen next; nowhere is this more evident than in the stock market. I am sure there were clues the stock was headed lower, but I didn’t see them.

 

The next day the stock dropped, erasing all of my profits. It was something to see. Still, I had a small profit, so I kept the position open.

 

 

Trade Exit.
From the picture above, you can see my exit wasn’t ideal. It looks more like an emotional exit than a prepared exit. A better position would have been near the close. Drive shack didn’t break the support line until the next day, so odds were it would have closed higher.

I have enough experience to see how these scenarios play out. You wait and wait, and finally, the market closes your position for you. When a stock starts to waiver from its strength, I look too close. Not only are you minimizing your risk, but you are also conserving your brainpower for another opportunity.

I exited at $3.41, which was a little better than the close at $3.39 the next day.

 

Trade Review
I’m learning to cut my losses, and I did well in that regard. However, trade management is proving to be more challenging than anticipated. The key is knowing “when.”

 

 

Looking at the daily chart, the volume accompanying this break through resistance than the other attempted breaks previously. I think this pullback is part of the continued move-up. I will re-enter this stock at the $3.43 level again.

 


Cash-Flow Management Review:

I’m getting a little better at managing my money. Most of my expenses are automatically deducted from my account except for my credit card payments. When I attempt to cut some of my entertainment accounts like Netflix and amazon prime, I reason that keeping my membership active helps with my sanity. For this enter pandemic, I’ve remained stationary at home.

I’m satisfied with the way I’ve been managing my money besides the bump of entertainment expenses during this pandemic.

All in All, I’d like to give myself a “C+” in cash management for the previous week.

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