Thursday, May 17, 2012

Blood in the streets?

4:05 am (Hawaii) There's no blood in the streets. Yet. But one blogger/writer yesterday insinuated that the set up is there for an almost necessary bloodbath-type selloff for a couple of days. It was ChessNwine of who put it so frankly, and it makes sense. There are just no buyers for a number of reasons. Vacation. Fear. Lack of will.

There's blood in my account, no joke. I held GSVC overnight, it opened at 18.11 and I breathed a little sigh of relief, being down only about a quarter instead of 75 cents a share. Then it sold off for the next 30 minutes to sub 17. And it looked like the orders were after-hours style. In other words, lack of liquidity had the market maker manipulating price action. I got out at 16.80 for a major loss (-1.55/share) that adds up to more than 3% of my entire account.

That may sound insignificant to you, but I'm a small player and every dollar matters. I violated Rule No. 1: Don't lose money. In this instance, the only way I could've prevented this would've been by putting a stop-loss sell order in. I would've done it at 17.50 or so. But there's no question, this little stock is absolutely controlled and somebody cleared out all the stop losses to get the price back down. Another rule I broke: I didn't know that there had been a secondary on Friday (?) with shares at 16.25, which explains why the price tanked that day.

But price discipline, PRICE DISCIPLINE is always key no matter what events occur, and I had none this morning. It's a different time from the flash crash year; stop loss is almost necessary with a small stock in an extremely thin market. I hope this rant of mine helps someone reading this. Get your stop-loss in on a selloff day like this. Sure, the indices are down fractionally, but just about EVERYTHING is red. There are no buyers, and games will be played that take your stocks to shit.

FAZ rocketed above 27, so of course I regret not holding my shares overnight. The JPM news (losses now $3B) set the tone, along with the Greek bank run. FAZ was available at 26.20 or so early on today, but I was preoccupied with GSVC. They moved almost inversely, simultaneously. One plunged, the other surged.

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