Category Archives: Trading
Man, time really flies when you’re spotting so many opportunities! I’ve been so busy scanning for new penny stocks, checking Twitter for what some of the other traders I follow are doing (I’ll have to post about that after a while, there are some really legit traders out there) and actually trading that I haven’t really updated this blog to reflect everything that’s been happening.
Needless to say, I’m freakin’ EXCITED. Good things are happening. I’m not making thousands of dollars a day yet–and I do mean YET–but I have really stumbled upon an awesome trading community that shares legit ideas, many of which I use for my own trades. I’ve said it before and I’ll say it again: Even if you follow a trader’s recommendations, and he has a 150% track record of success, you STILL need to do your own homework and due diligence. You need to have your OWN reasons for getting into a trade, based on your OWN understanding of the chart setups and price action. You can’t just blindly rely on someone else’s stock picks, even when they are right 150% of the time. You need to understand how to PROPERLY TRADE those stocks, or you’ll still crap out and make zero money. You need to know what price levels are good for entry, what type of position sizing you’ll need to take to make it a profitable trade, what type of profit target you’ll have, what type of stop-loss level you’ll have, etc. Believe me when I say, I speak from experience about this. Rushing into a trade without working out these details is STUPID.
VGZ Loss: $36.00
I rushed into the VGZ trade without really doing my homework, and without waiting for the freakin’ BREAKOUT. Let me tell you something, a chart can have all the right action, but if you’re trading with a small account, you can’t afford to get in pre-breakout and just wait around for what may (or may not) happen. Oftentimes, the price will bang right up against resistance, only to sink down again into what seems to be a never-ending price range. When trading with a small account (as I have been), make sure to wait for the breakout. I cannot emphasize this enough. Yeah, you may lose a few cents on your entry, but at least you will have confirmed that prices are indeed moving up above longer-term resistance, and you increase your odds of being on the right side of the price action. I didn’t wait for the breakout, and thought that I had seen a bull pennant forming on VGZ. Unfortunately, because I didn’t wait for the breakout, the price instead broke down and hit around 0.59 or so. I got out with a roughly $36.00 loss. I didn’t want to wait around to see if it would keep trending lower, and I didn’t want to have my much-needed trading capital tied up in a stock that may or may not do anything this year. I chose to take the $36.00 hit now (opportunity cost, I guess) in order to free up that capital for more advantageous trading setups. I do believe that VGZ will eventually move, and when it does, it may well be a monster. But believe you me, I ain’t doing JACK with VGZ again until I see a breakout above the current longer-term resistance at 0.90.
VRML Profit: $31.00
This was a sweet gig. I was already in from 2/28/14, and I noticed some peculiar price action at the end of the trading day on 3/3/14 which kinda tipped me off that the move in VRML would happen on Tuesday (the 4th). Thankfully, I was right. Prices spiked early in the trading session, hitting 3.83 before calming down for the rest of the day. I had already placed my exit order at 3.75 before the market opened. I ended up collecting a tidy $31.00 profit from the trade, and I gotta tell you, my confidence was really boosted by this. It wasn’t so much the dollar amount of the profits (which is almost laughable by many traders’ standards); it was the fact that I interpreted the price action correctly and traded the formation correctly. I didn’t get greedy and try to wait and see if it would hit 4; I felt comfortable with taking profits at 3.75 because I believed it was a realistic, 1-day goal based on the previous price action.
The Trade That ROX
Okay, on to ROX (Castle Brands). I found out about this one on 3/5/14 due to one of Cameron Fous’s Twitter alerts. I saw where the chart showed very positive signs of a breakout, with resistance at 0.96 being broken. I also saw where the highest known resistance (for multiple years) was 1.10. This made me excited and nervous at the same time. I wasn’t sure if it would crack 1.10, or just bang up against it real hard and sink back down, as it had done the previous two times on November 14th and 15th of 2013 (see chart below):
I got in at 0.9391 (300 shares), and basically watched the price action all day long. I was enamored by this stock, and I really don’t know why. I was really trying to determine whether or not it would punch through that 1.10 resistance, or just hit it and sink back down. The stock hit a high of 1.08 for the day and basically stayed at the high for the last hour of trading–definitely a good sign. Sometimes when a stock hits a high early in the morning but then stays at the low end of the trading range all day, it may have been a fluke or a quick flash, but not have any real buying momentum behind it. So, I chose to play it safe and exit about 5 minutes before the bell at 1.07, booking a small $19.00 profit.
A couple of times I felt as if I should just stay in overnight and see what would happen (which in hindsight would have been the RIGHT move), but then I had that nagging thought about that doggone 1.10 area. I didn’t want to be in the stock in the morning and see it go up to 1.10, only to totally deflate later. The tons of buying happening at 1.06 – 1.08 should have convinced me otherwise, but I felt that it would be better to play it safe. Turns out I played it a little too safe. On 3/6/14, ROX opened up and went ballistic out the gate. Since 1.10 was a multi-year resistance point, this was basically a blue sky breakout–and man, did it break out. The stock hit a high of 1.24 within the first 30 minutes of trading, and after that I just stopped watching, lest I would have gotten that sour “pit in the stomach” feeling about exiting too early. Although I didn’t lose any money on this trade, I should have remembered one of the most famous technical trading principles of all time: If a stock closes at or near the high of the day, on strong volume, ESPECIALLY if it’s the first day of the breakout, it is almost ALWAYS followed with an additional day of strong upward price action. Most of the time the second day is even more explosive than the first, as this is when the noobs, bandwagoneers and “civilians” are clamoring to get in. If you think about it, it’s basic physics: A body in motion tends to stay in motion.
So, I’m happy for all those who stuck it out in ROX and were able to milk it for even more profits. I could have easily doubled or tripled what I made by just staying in an extra 24 hours. Lesson learned.
Golden Star Resources Ltd (GSS) – My Current Trade
Man, there are so many opportunities in the markets right now!!! I’ve had my eye on Golden Star Resources (GSS) for a while due to the ridiculous head-and-shoulders bottom formation. The 1-year chart looked as if it had been itching for a breakout above long-term resistance at 0.85 (from August of 2013), so I placed a Trade Trigger (via TDAmeritrade) on 3/6/14 basically saying that if the price cracks 0.86, I want in. Well, on 3/6/14 the stock hit a high of 0.886, and my order was triggered. I got long 200 shares of GSS at 0.8596. Interestingly enough, after my order was filled, the stock just kind of languished and the breakout didn’t have enough follow-through to punch through 0.90. I thought for sure that it would happen based on the chart, but it isn’t the first time a stock didn’t “behave” like I thought it would. So, I’m currently in GSS, sitting with a very small loss at the moment, but I do believe that as long as support around 0.75 holds, it still has a good likelihood of returning back to the 0.89 high and then subsequently breaking higher.
An interesting thing to note is that I had heard about certain hedge funds and institutional investors using the miners to hedge their long gold positions in massive spread trades (long gold futures and short gold stocks). I’m beginning to wonder if GSS is in that category just by the way that the breakout seemed to be capped off prematurely. This is all speculation, though, I could totally be wrong. I did notice on the 1-minute chart, however, that on 3/6/14 after the pop to ~0.89 happened, over 100,000 shares were dumped onto the market in a 1-minute tick. This was by far the largest single-minute volume activity on GSS. Maybe that was some type of algo, I have no idea, but I did find it interesting.
Goldfield Corp (GV) – Beautiful 1-Year Chart, Breakout, My Other Current Trade
What’s funny is that I had written the above paragraphs last week, and now it’s Monday and I’m in another stock. This stock is Goldfield Corp (GV). It has an absolutely gorgeous 1-year chart, and it broke out from a fairly long-term resistance point at 2.45 to close this past Friday at 2.53. Here’s the chart:
I found this chart by way of Mr. Incredible late Sunday evening (3/9/14). I almost crapped my pants when I saw it. This stock definitely has potential to hit at least 3, if not higher. The break over 2.50 was very constructive, and the fact that it closed at the high of 2.53 this past Friday (3/7/14) was a good sign of strength. The ultimate hurdle will be the 2.61 resistance that was put in on 10/18/13. Going a little further back, the stock gapped down on 5/9/13, breaking below 3.00 per share, and this started a period of accumulation that has been going on for roughly nine months now. I see quite a takeoff for this one, and typically the longer and more quiet the base, the stronger the rise when the breakout happens. I believe that the stock may try to “redeem” itself by pushing back above 3 eventually, and hopefully it won’t take very long.
The only thing that concerned me about GV was the low volume and fairly large intra-day price ranges. For a small account like mine, this can really jack you up if you’re playing your stops tight. So, I’m not risking a whole lot on this trade; I’m limiting myself to only 100 shares.
UPDATE 3/10/14: I am now long 100 shares of GV from 2.53. I got long right at the open, and since then the price has kind of lagged, with fairly low volume. I thought that today would be a little “busier” than yesterday due to the good breakout on Friday, but hey, it is what it is. I’m looking for a rise to at least 3.00 for this one.
Okay, this post is long enough. Over and out!