Don't be a Greedy Dumb Ass Like Me

So I'm writing today to talk about screwing up. I've been riding high recently, mostly on my investment in Visa (V.) This made me cocky, and also stupid. I decided to try some swing trades, pretty much going off of nothing. Let's just say I learned a lot.

Here is the situation:

Kodiak Oil and Gas Corp. (AMEX: KOG) is a pretty volitle little stock. Its way up this year, but I looked at it after it hit $4.00 a share, a recent high. From there I figured it would drop, which it did from the beginning. However, it kept dropping. I was looking for an entry point, and I bought soon after the mega drop (see chart 1) at $3.60 and $3.72. I sold some shares right before close at just about $3.80.

Pretty sweet right? Nice 5.6% gain in under 2 hours. But the problem was I got greedy. I kept a majority of shares waiting for $4.00 again. I watched shares the next day open at $3.60 settting off a my stop sell order at $3.70. Ouch.

It doesn't end there. I figured I had avoided much of the worst, and so I kept watching the stock. On Tuesday I watched shares continue their demise, and waited for a entry point. After seeing the trough at around $3.40 for about 30 minutes (see below chart), I missed the boat and couldn't get a price below $3.49. I wasn't worried however, because I was counting on a return to $3.65-3.70 and making up my losses from the day before. However, shares didn't rise above $3.55, and I ended up keeping shares overnight (BAD IDEA.) I missed selling at $3.60 the next day, getting really greedy, and came back a little later to see prices were wayyyy down. Today I'm looking at KOG pricing between $3.25 and $3.40. Pretty sucky.

This is the epitome of crappy, stupid, pathetic day trading at it's worst. I gave up taking 5.6% gains in favor of chasing more. Then I tried to win my losses back by trading the same stock in the same way, and not taking gains when I had them. DON'T LET THIS HAPPEN TO YOU!!!!!

My strategy for these trades was sound. I looked for waining negative volume, bought at a low price and watched the price grow, however, I got greedy and couldn't sell for a small gain. Now I'm faced with stupid losses, and have to either hold onto a stock like KOG, or else sell for a sizable loss. Lesson: Be smart with swing/day trading. Remember, if you make just 1% a day after fees and commissions, your making over 200% a year.

ECRO Drops

So I wrote about daytrading a while back, and mentioned ECC Capital Corp (ECRO.) I also mentioned them when I talked about dividends, because they paid such a high one last week. I mentioned how easily it was to trade this stock effectively because of its clear and stable supports and resistance values. However, this all changed today as ECRO closed at .11, and traded as low as .095. This is huge drop, -31.25%, probably represents the beginning of a new trend. I would guess that today's close price (around .10 or .11) will become either the new resistance or new support (probably the support) and a new pattern will be determined in the coming weeks. I would stay away from the stock until a pattern emerges, because if you guess and guess wrong, you could stand to loose a TON. I'm guessing that the sell off is due to the dividend being paid out Friday, and today was the first day of trading afterwards. However, the actual reason may be just arbitrary selling by investors, or knowledge of something that happened that I don't have. After the new pattern is set, I think the stock will still be a good one to day trade, because it seems to settle into predictable patterns of established supports and resistance.

Day Trades

While Day Trading seems risky, (Pussy) its way more fun than long term investing and can make money a hell of a lot faster than waiting months or years for investments to pan out. Shit, I lost an average of 4.5% today on my long term picks. Day trading can be a way to suplement the income. The things I look for in a day trade are 1) Small price, 2)Volitility 3)Enough Volume 4)Patterns. The basis of day trading is just buy low sell high, but having a stock that you can be pretty sure of what is about to happen, based on what usually happens, makes trading it waaaay easier. Two stocks that I day trade are ECC Capital Corp and Zix Corp.


ECC Capital Corp (ECRO) is a OTC stock. They have declared bankruptcy or something idk, its a shitty company, but it pretty much meets all my requirements. It trades around .15 CHEAP. It moves one or two cents a day (thats like 6.67%-13.33% a day) It has okay volume. Usually around 100,000 a day. It can be a problem however, and not being able to get a sell through is a huge red flag with day trading, and has been a problem for me. The reason I choose to trade it is that it has a very predictable pattern. Buy at .15, Sell at .17 or .18. The support at .15 is almost perfect, and this leads to an easy entry point. (See graph)



Zix Corp (ZIXI) actually is a company I think long term is a pretty damn good investment. They're a leader in email encryption, and I think they will suceed. However, currently they're not doing much, except being a sweet candiate for some day trade action. They meet all the epectations of a good day trade stock. They are cheap, trading in the $4 range. They are volitile, usually .1 to .3, or 2.5%-7.5%, a day. It has sufficient volume, with an Avg Vol of 641,000 on NASDAQ. Perhaps most importantly, it is an easy stock to trade because of its predictability. There is a definet support around $3.8 and a resistance in the $4.1-$4.2 range. (See graph)