First Significant Loss – $(1,426), 50% of Account

$(1,426) realized loss on DARE (before reverse stock split, CERU)

  1. Entry: BOT 2000 Shares @ 1.14 average fill price
  2. 10:1 Reverse Stock Split (CERU -> DARE)
  3. Exit: SLD 200 Shares @ 4.29 average fill price

Account size halved from ~$3,000 to ~$1,500.

CERU_7_26_17_chartsDARE_7_26_17_chart

High Level: Dragged out, hope filled disappointment.  The silver lining is that this is an experience I can learn from and the loss is bearable, I’m only trading with what I can lose – with what I can psychologically handle.

Strategy: Initially, buy the breakout on good news and exit at target.  What actually happened: Hold, hope, hold the bags & suffer till you can’t take it anymore.  From what I’ve read … classic new trader behavior.

Exit description: I sold my 200 shares of DARE earlier this morning because I finally realized how ridiculous my reasons were for holding.  From the very beginning I was stubborn and wanted to be right instead of seeing what was in front of me, a clear pump and dump that I should have left at first sign of declining volume and flattening price action.  I was greedy.  I didn’t want to realize a loss at $200, but my total loss could be $200 and not $1,500.  On the flip side, I am thankful that this was a $1,500 loss, not $15,000 or $150,000.  This is tuition, this is education, I need these losses to learn what not to do.

A few more takeaways from this trade:

  1. Don’t bet on a comeback from a conference call
  2. Don’t bet on a comeback after a reverse stock split, ESPECIALLY when the firm in question received notice from the NASDAQ about keeping their stock above $1
  3. Don’t fall for confirmation bias more than once, I found myself searching the web / news / stocktwits / seeking alpha / etc. looking for something to confirm that this stock was going to make a come back and that I would be rewarded for holding and hoping.  I was looking for Ovaprene (flagship drug that DARE is developing) to be a game changer, but their game plan is far out, two years – not now.
  4. Don’t fall for wanting to be right over making money.  I was wrong, I should have cut my losses as soon as my mental stop was hit.
  5. Respect your max loss for each trade.  Focus on minimizing the downside, the upside will take care of itself.  Instead of focusing on the amount of money you can make from a trade, focus on what is the MOST you can risk losing.
  6. Trading without a system, is asking for disaster.  Focus on three things:
    • Trading Methodology
    • Money Management Technique
    • Best Markets for Setup

Rule #1: Never Lose Money

Rule #2: Never forget Rule #1

– Warren Buffet

Trade #5 – $AVEO 6/28/17

  • Position: Long
  • Entry: 2.20
  • Risk: 2.04
  • Size: 500 shares
  • Risk ($):
  • Target: 2.35


Sizes into the morning dip with 4 x 100 shares @ 2.16 sold into strength shortly after. 

Tried to buy a dip later @ 2.30 6:58, but stock crashed down, tested support at 2.20 and failed, sold for a small loss. Overall, a positive trade +17

I played this perfect until the crash. Buy the morning dip and sell into strength.

Since I had four 100 share trades & my account size < 25k, I believe I triggered the PDT rule.

Now, how to replicate this trade consistently.

  • Perfect breakout after morning dip
  • Daily Volume: 23.5m
  • Average Volume: 3.1m
  • Market Cap: 231m
  • Sector: Biopharmaceuticals