Old Post Review from 2014: "Expensive haircut"

Welcome to the relaunched Greenspud Trades! This blog is my "thinking out loud" journal with my thoughts on the stock market, economy, and individual trades.

I'm going to be reviewing some of my old posts to reflect on how much I've improved as a trader over the last 10 years. This is a retrospective of a post I made in 2014 regarding a trade in a stock called Rewalk Robotics $RWLK.

I nailed the "ABCD" day trade setup that I was trading along with the Investors Underground chatroom at the time.  That's the setup with a hot stock has a big bump at the open, settles down midday for some consolidation, and then grinds its way up into the close. Nate Michaud talks about those points on the chart using the letters A-B-C-D.

This was a hyped IPO that just premiered. Good candidate for this sort of setup. Here's what the bigger picture chart looked like at the time.

The original post was about how I missed out on a huge gain in the stock because I had to leave the computer and took the trade off. That was good risk management. Any time you are in a high risk trade like that, you can't afford to leave it unattended. I could have come back an hour later to find out that I've lost thousands of dollars.

I blew this trade for a really stupid reason - I had to leave for a haircut appointment. Next time just schedule a haircut for a different time that doesn't interfere with trading. The market isn't going to wait for you.

The trade was only on for a mere 15 minutes. That's not enough time for a trade to manifest. The time frame I was trading when I was new to this was much too short. I made every decision based on the 1 minute chart and often overlooked the big picture.

Also, my position was only at a cost basis of $9,550 at an open of 19.10. Let's say I maxed out and took profits at 22 that would have been a gain of $1,450, or 15%. Not a bad for a one day profit for a small initial investment!

This stock eventually cooled off and went to penny stock land after about 3 years.

What I'd Do Differently Today

Given how my trading style evolved today, I would have probably taken 1/2 or 3/4 of my profit into that huge run up mid-day and considered leaving the trade on overnight to try catching any sort of bump up in the morning, either premarket or at the open. Given that the stock was stable in the premarket from the previous day's close, I probably would hold into the open and sold somewhere on one of the first red candles. 

But, hindsight is 20/20, so it's hard to say exactly what I'd actually do if I encountered this exact same setup today.

I had the most expensive haircut of my life today! I was long 500 shares of RWLK at 19.10. But I closed out most of it for a very small gain ($74) because I had to leave for a 1pm haircut appointment I scheduled earlier in the week. When I got back I found out that this stock broke out to almost 30! I left the computer just minutes before this breakout began and missed out on close to $5,000. That was an expensive haircut!

I really had no idea that this stock had the mojo to make it up to 30, so I'm just happy that I was able to take a profit at all. It had a really wide range bouncing between the upper 18's and 19.50 for a while and I didn't feel comfortable leaving it with an automatic stop.

In retrospect this was a perfect ABCD breakout setup.  The stock hit a temporary high and sat back. But then it was gearing with higher and higher lows. It coiled up and broke to the upside.