$PBMD was up today on an Analyst upgrade. I originally thought the stock was up on Phase 1 news. That was an old press release but it appeared as the latest story on Yahoo Finance?!? Error on my part as I should of looked at the story date.
Either way the stock was up about 30% in the pre-market which is unusual. If a stock such as Apple, Amazon or Microsoft was up 30%, it would be a huge deal! Going into this trade I expected to see the price drop right at the open.
For the last few months I’ve noticed a lot of premarket high flyers getting crushed into the open and then rebounding a bit before falling back to earth. $PBMD sort of did that this morning only it had a nice upward spike right at the open before losing steam.
I noticed that $1.50 was acting as a resistance level. Whole and half dollar amounts are magnets for the human psyche. Most day traders instinctively know that if a stock can break through a whole or half dollar amount the price could continue upwards.
$PBMD was having trouble breaking through the $1.50 mark and the volume started to dry up. To me those are all signs that the stocks momentum is weakening. When the momentum dries up, so does the price action.
When the hype is over, generally a stock will start coming down in price. More or less that’s what happened with $PBMD today. There was a nice run in the premarket that resulted in a huge gap up. Momentum traders are looking for gappers in the morning.
I knew this stock would have a lot of eyes on it, but was doubtful that a 30% increase could hold up throughout the day without dropping a few times. As I’ve recently learned, day traders are all about buying dips and shorting when the hype dies down.
I took a page from the day traders playbook and shorted right as I noticed the $1.50 level was acting as resistance. In fact, I was pretty confident in my decision and doubled my position as it had trouble breaking through $1.50 for a second time.
This marks my 100th documented trade. I’ve come a long way from my very first trade. Over the last year I’ve read a ton of books, watched a ton of videos, used a few different brokers, joined countless guru chat rooms and even tried out a variety of platforms.
Spending hours on end writing, rewriting and proof reading articles like this one isn’t as easy as it may seem. There were countless times that I almost abandoned this blog simply because I wanted to spend more time learning and less time spinning my wheels.
I’m glad I kept this website going as it provides me with a source to review my mistakes and revel in the victories. Video taping the trades as they happen has proved to be the most effective method of learning for me. I re-watch my videos over and over!
Trading is all about experience. Each trading day will offer up something different. Something you’ve never seen. Its all about taking what you have seen, and applying that towards your current situation. Trading is a marathon, not a race.
I’ve blown up my account probably 10 times in the last year. Each time I considered quitting. Everyone has to realize that losing is apart of learning. Unfortunately I have to make the some mistakes over and over again before they sink in.
15 months in and I finally have a firm grasp on whats really going on. I can now find the hottest stocks each day before the open. I still have a tendency to force trades but I’m working on that. Overall my trading has vastly improved over the past 6 months.
I will only get better as time goes on.
I’ve finally gotten over the hump of thinking that I will never succeed. I used to think that day trading gurus were all full of shit. I’m finally beginning to see the light. Today’s trade was one of my biggest winners and a great place to retire this blog.
I have no intention of quitting. But I am going to focus my time and attention elsewhere. The few hours each day I spend here will be used to further research companies and strengthen my knowledge and understanding of financial statements.
I’m working on a new website that I’ll be announcing soon. It will be free like this one. Please add me on Twitter to continue following my progress or just sign up for the newsletter. I plan on writing more informational posts and reviews, just not as frequent.
I’d like to thank all of the people who visit this site and follow me on Twitter for your kind words of encouragement and helpful guidance. 100 trades down and a million more to go! Stay tuned for a big announcement coming sometime in the coming weeks!
Thanks again for all of your support! JC