Was looking at another 0 volatility day yesterday and I got into a "boredom trade" which is a trade that doesn't meet any of your specific parameters but you just think it is up too much or down too much based on the fundamentals and you do not wait for any technical trigger to show you that the trend is indeed your friend.
That's how I got trapped in $SNAP yesterday, thinking that this company is no way in hell worth 19$/share and I initiated a short in the 18.70's level but my technical parameters which I usually wait for weren't met. I am most probably right that it is not worth 19$/share but that doesn't mean it has to go down when I get into the trade. It may very well squeeze to 25$ before it goes down to the 10$ area. Plenty of people have gone broke by being right in the stock market. TIMING is everything.
Here's your $SNAP yesterday.
No real setup for me personally and I took a scratch loss. It's so tiny that the amount is not bothering me at all, what does bother me instead is the fact that I lost my patience in this market and I entered into a trade just to be in a trade which is where most traders take their losses from. It is much better to stand on the sidelines if nothing fits your parameters than to end day in the red.
I also missed $WMT short in the morning which did fit my technical parameters.
Nice opportunity to get in at the 94.20$ break and it went down to the 91.30$ area. Unfortunately I just saw this one after the move has already happened.
$ANTH a small cap junk provided a great opportunity to buy into in the morning as well
I hesitated going long on this one in the 2.30s because fundamentally it still junk and I don't like using my money to buy garbage. Nonetheless if you know not to marry this stock and be out of the trade in a few minutes/hrs then you can make some nice gains on the long side on these small caps. Even though fundamentally this is a POS, it gave a technical trigger for the long and honestly I really need to get better at longing these small caps when they give a technical trigger but knowing exactly what they are is stopping me from pressing the button.
Anyway hope you remember some basic but very important stuff:
- Never boredom trade, if you are bored go watch Netflix rather than lose money in the market.
- You need both fundamentals and technicals to be on your side in a great trade, just one of them isn't enough.
Trade well!
good job dude!
is Netflix and some other tech stocks a bit overrated? :-)
Thanks man! Netflix had really good earnings this quarter although if 280$/sh is overrated or not I will let that in the hands of the strictly fundamental guys to decide, I myself just follow the price action, so even if I thought that it is overvalued at 280$ if I see any kind of bullish signal/trigger that tells me this is going higher I will not hesitate to go long for a potential all-time break out. I just use basic fundamental analysis only to see if a company is solid/garbage. I use technical analysis to tell me which way this is going to go regardless of what I think about the company. Long story short: I wouldn't short these tech stocks even if they are overrated unless they give a technical signal to a potential downside. Also they follow the $SPY and $QQQ and the trend is still to the upside even with this past mini crash.