Last week I began the process of buying and selling extremely volatile stocks in order to make small, quick profits. Although I do not currently meet the IRS’ & SEC’s definition of a Day Trader, I have been, in essence, day trading. Last week I managed to profit by about $7.90 from a $560 investment, you can read all out that adventure here. I left off with 230 shares of SGYP set to sell with a limit order at $1.92.
DAY TRADING–Sort of…
This morning the alert came through on my smartphone that the sale of SGYP was executed, the total from the sale was $441.60. A nice profit of $13.24! While $13 is not all that impressive, it was a gain of more than 3% of the price paid. My strategy right now is to play with smaller amounts to limit the damage I can do while I learn. I do keep track of the percentage gains because they will be extremely important if I decide to scale up and become a full-time day trader. The percentage increase would be the same if I made the same trades with larger amounts. For example, had I made this same trade with $10,000, I would have profited $300, $20,000 would be $600 and so on.
A day trader is one who makes their income doing trades like these. One might set a goal of $1,000 per week which comes out to $52,000 per year. If your goal is $1,000 per week and you manage a $600 profit on the first day of the week, you are well poised to meet your weekly goal. Day trading is all about the numbers and making them work for you.
LUMBER LIQUIDATORS (LL)
If you have been reading this blog, you know LL was my first trade in May of 2017. Initially, it did very well and seemed like it was on its way up. Before the last earnings report, I bought even more shares. The share price then fell because they settled a lawsuit and used a large portion of their profits in the lawsuit settlement. The fundamentals still looked good and I still believe in this company, both in the short term and long term. So as the day drew to a close and none of the other short terms stocks I monitor were at a good level to buy, I went ahead and made my 3rd investment in LL. With my Robinhood Brokerage account I made the following trade:
2/26 Bought 17 shares for $24.88 each, total price was $422.94
When the earnings report came out the news was good! They beat their estimated earnings by a small margin, their earnings were $0.10 per share. The analysis was predicting $0.09, a small beat, but it should mean a good day with some upward movement, or so I thought. When the markets opened, the price tanked, dropping more than 10% within the first 30 minutes. During the earnings conference call, they mentioned that they missed expected revenue, the actual was $260 million while the expected was $264 million. Lastly, the promotions that LL ran at the end of last year did not produce as many sales as they anticipated. These numbers seem like small apples but for a company trying to regain it’s footing, all this news led to a large drop in price. It might be a good long-term stock but the short term was looking bleak.
I went ahead and exited my position, selling for $21.86 per share, total cash from the sale was $371.64. A loss of $51.30, about 12%.
I will hold my other LL positions for the time being and hope for a better cash out point in the near future. I wanted the stock to make some profits for me but it just wasn’t in the cards today. Better to cut my losses than watch it bleed.
Here is a summary of the trades I made the rest of the week:
All the following trades were made within my Robinhood Brokerage account. If you have trouble following the exact timelines, click here to see a summary of all the trades in chronological order. My end of the week holdings are listed here.
I bought 26 shares for $5.35 each last week
I set a limit sales of $5.45 which executed on 2/27. A nice profit of $2.60, about 1.8%
ZIOP, which I traded some last week, read about that here, was falling again.
I set a Limit buy order for 43 shares at a price of $3.75 each, which was executed a few minutes later, total price was $161.25.
I set a sell limit order for $3.85. This sale executed on 2/28 for $165.55. A profit of $4.30, 2.6%.
BAS had fallen about 6% this morning, well below my established buy price of $19.40.
I bought 19 shares for $18.66 each, a total price of $354.54
I set a sell limit order for $19.60
Sell limit order executed for $1.92 per share. Total sale was $441.60, a profit of $13.24, about 3%
The price was falling again so I took the opportunity to try for more profits!
I set a limit buy order for 101 shares at $1.80 per share. This executed within a few minutes, total cost $181.80
I set a sell limit order for $1.90. This executed near the market open on 3/2, for $191.90. A profit of $10.10, 5.6%.
This price was falling with the rest of the market on Friday morning. Looked like a great buy opportunity for a short-term profit.
I bought 31 shares for $11.50 each, total cost of $356.47
I set a sell limit order for $12.00.
TAKING A BREAK
2/28 After taking a beating on the LL trades yesterday, I decided to slow down. Some of the other stocks I had set for short-term gains were also doing poorly. I have read in many day trading articles that you must keep emotion out. If you have a hard day there is no shame in taking a day off. Rather than trying to outsmart the market, I decided it would be better to observe for a day or two. I decided to make no active trades on 2/28 and leave all my sell limit orders in place.
One of my longest and best profiting stocks, Lowes (LOW), dropped more than 10% at the beginning of the trading day on a poor earnings report. By midday, it had recovered to a 5% loss but it was still difficult to stomach. I’m glad I took today off (of trading). Day trading is a mental game and when you’re not in the right state of mind, the best bet is to do nothing.
As promised, I have shared my gains and losses. In these past 2 weeks of quick trades, I have profited $38.14 on 7 successful trades and lost $51.30 on 1 poor trade. Net loss is $13.16. We have learned that one poor, undisciplined trade can erase a week of good profits.
I felt better and more confident the next day, 3/1. So I began trading again with a strict mindset to follow my plan or not trade. I was fairly successful despite a rocky end to the week. Next week will be an adventure for sure, join me then to see what happens.
End of Week Contributions
3/2 I contributed:
$105 to my IRA
$50 to my Etrade Brokerage
$170 to my Robinhood Brokerage from the side hustle account.
Thanks for reading and please FOLLOW THIS BLOG!!
Don’t forget to check back next week to see if I can fully recover from this and get back in the black!