Trade #77 – Settled

In Trades by JCLeave a Comment

The stocks I really wanted to short this morning I couldn’t get borrows for. SureTrader has its advantages for traders that are just starting out.

Their list of stocks to short is something to be desired.

I don’t feel as if I settled for trading $FTR today, but it was the only stock within my price range that looked a little over extended to me.

They announced a common stock offering this morning.

I don’t fully understand what it means to offer more common stock. Generally I see these companies experience a nice spike in the pre-market only to lose some of the gains as the day goes by. Now that I’m into the trade, I see why they’re offering additional stock.

Looking at the 3 month chart for $FTR, it appears the stock has been losing value. They needed something to bring investors back.

I shorted $FTR around 9:41am at $5.18 per share. At the time, $5.18 was acting as a resistance level. Watching the Level II indicator, it seemed to be a good entry. Immediately after shorting this stock, I noticed it’d been putting in higher lows.

Thats a bullish signal.

I should have bailed at that point. I think what kept me interested was the amount of volume coming into the stock. The volume was heavy and yet the price wasn’t moving. At the time, that seemed like a bearish sign to me.

It’s about 12:30pm EST as I’m writing this. $FTR is still trading sideways. It’s been holding the $5.18 price range since the open. It’s traded 20,000,000 shares yet the price hasn’t moved much?!? This is a perfect example of a stock that’s not worth my time to continue watching or trading.

It needs to start putting in lower highs before it starts to crack.

In the end, SureTrader kicked me out of this trade due to my overall buying power. They’ll normally let me use margin for about an hour on each trade. After an hour or so, they reduced my position based on my equity.

I’m still holding 30 shares short of $FTR.

I have a Stop Market Order in to sell at $5.25. Otherwise I plan on riding this out until the end of the day. If I get lucky, I may be able to break even.

End of day update:

In my mind, I was making this out to be a huge defeat. Around 3:45pm when I sold the remaining shares, I noticed my loss was only $1.00. The reason it seemed big is because I invested about 3 hours of my time into watching this stock.

When this stock started going sideways, I should have sold immediately then searched the Internet to find out why. This is the first time I’ve seen a stock trade 30,000,000 shares, yet remain the same price all day.

$FTR has a float of about 995M shares.

I should have known that before going into the trade. As always, each morning I look for stocks with at least 200,000 shares trades before the opening bell. $FTR appeared as if it would be today’s volatile, crazy stock.

I was wrong.

$FTR has 1 billion shares outstanding. This is a thick stock. Its going to take more than a couple million shares traded to move this beast. Now I know. Each morning I’ll pay closer attention to the float.

TC-2000I’m able to see the float rotation for any given stock directly from my watch list. I just wasn’t paying attention. Lesson learned. The lower a companies float, the better odds it has of going crazy when large volume is applied.

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