While I think shorting (mostly) as well as occasionally longing certain pumps from various emails and websites can be a viable strategy (click on the Pump-Watch link above for other posts on the subject), right now I’ve decided it creates too much “noise” for me. I want to focus on mastering the microcap momentum strategy by using the ideas from the Green on the Screen / Fear and Greed Day Trader approaches.
If I ever get a big account, I think I will try shorting Beacon Equity pumps for fun in small lots of like 100 shares. This is in part because you have to typically put up collateral to short such penny stocks, and because even though pumped stocks usually always tank after spiking, it can still be a dangerous play. Relying on information from another party to help identify stocks to enter into trades is not self-sustaining – so I don’t want to depend on it as core strategy.
Before I came to that conclusion, I did sign up for some other pumper emails, and now I get so many I can NOT keep up with them all. They include www.lebed.biz, www.HotOtc.com, and www.super-trades.com. The story behind the owner of the first site has a notorious background, as witnessed by the NY Times article titled: “Jonathan Lebed: Stock Manipulator, S.E.C. Nemesis – and 15”, talked about in this Wikipedia article about him. While I am not closely tracking these pump emails to identify set-ups, I do try to pay attention to them to see if a stock I’m considering trading is being influenced by pumping.
Unfortunately, my schedule is crazy this week. After my break from paper trading, I’m ready to to get back at it, but it may be as late as Thursday before I have time. I did make my first trade in Complacent Panda’s Wall Street Survivor contest today, by shorting AKAM in the morning. It was up $2 from last week, gapping up more at open today, and the overall market was weak this morning. I failed to check for news – but AKAM was raised from a hold to buy today by an analyst. This helped the stock jump like a $1 in a half hour after I shorted! I was stopped out with a $350 or so lost. Lesson: always check for earnings and other news to cross check your chart analysis.
I’m talking to my psychiatrist about this (ha, ha), but in this version of fantasy trading, I was not worried about what was going to happen and did not hover over the ticker all morning. And I had a $.35 cent stop to boot. However, when I trade using my Paper Money account with Think or Swim, I’m like an anxious father in the waiting room of the hospital on the morning of the birth of his first baby! Why the difference because it’s all fake, I don’t know? But I am thinking about lowering my position shares from 1000 so that I’m a little more calm with my simulated trading that I track on this blog. Or I can just act like it’s not real money. I’m not trying to make a point here, just making fun of myself.