Wednesday's Lesson, Intra-Day Buying

When you have a stock picked out and you want to get it during the day to get the best price, what time should you buy? The fact of the matter is is that it depends on what type of trade you really are doing. The ones I have been performing have been reliant on every penny for every penny is a good portion of money. Furthermore, I have been doing volatile trades where things can quickly change. If I am buying for a 2 year hold, do you think I care about where I get in as critically as a day hold? After the ARDI mix up I realized that I had made a basic mistake that I knew I shouldn't have; don't buy in the early morning hours, especially with a downtrending stock. The type of trade ARDI was was like trying to catch a falling knife. Image someone holding a knife in the air, you put ur hand out and without moving it upwards or downwards u try to catch the knife as it falls. Well, think about it, if you miss the knife then the knife hits the floor, if you catch the knife by the handle then you are ok, but what if you try to catch it and cut yourself on the blade? Same thing with trying to catch stocks that are on a downswing; you have to catch it perfectly. If I think a stock has bottomed out at $5 a share, I buy in, but the stock then runs all the way down to $3, well did I catch that knife? What if I buy in that same stock at $5, but it then trails down to $4.80, well then I caught it but I am bleeding, should I just let go? In the end, unless you catch it perfectly at the handle you are always in a tough call situation. ARDI I caught it at what I thought was the handle, in fact I was literally maybe a centimeter off, I started to bleed (maybe $.02 or so) then let go. ARDI had a support level of $2.50 which is where I sold out; that day its low was $2.47. Now the stock is at $2.77 which is what I originally predicted. Since I didn't know how far down it was going to go, I decided to let go and heal my wound.

I hope you can apply this way of thinking to your own trading one day or in your next trade because it is important. So many people (including myself) will think, "Hey, this bad boy has bottomed out, it is so cheap it is bound to go up." ERRR, wrong. You NEVER KNOW what a stock will actually do. Between news, trading sharks, and Money Makers, it is always a gambling game, remember that. I only lost about $100 letting go, but I have lost 10s of thousands by holding on for too long. THE MENTALITY OF "IT WILL COME BACK IT WILL COME BACK" will EAT YOU UP if you don't control it. I can't stress this enough, just stay disciplined!! There are many more opportunities out there; the game will always be around. I have played this game many times and have learned great timing. Either way my timing can still be off. If you catch them right there can be big rewards waiting for you; that is the risk you take. In my eyes, I live to take those kind of risks because that is what I love, the challenge of catching it just right. ARDI was almost caught perfectly but I was off but a few centimeters and now I get to watch it run up (at least Thursday and now today). I can either stare at it and think, "I am stupid I am stupid" or go "Where was my timing wrong..." What sounds more time beneficial to you?

So, this is exactly what I spent the past day doing, just looking and staring not only at the chart but at the intra-day buying trends of that day. I realized that my mistake came when I bought too early in the morning. The best time (which i eventually remembered from a past lesson) to buy (this is just my belief for catching a falling knife and only a falling knife) is towards the end of the day. 9 out of 10 times the "bounce" day or days start right in the morning with an upward trend. If you can (by looking at a chart and buying behavior) get in at the end of a previous day at a steal price, then if the next day it opens up to a quick upward trend, well then you know you are ok, but if not, and it is even the bit questionable, get out with discipline. ARDI closed around its low to open up the next day up and now as I type it is claiming new intra-day highs (sad for me, good for a great lesson). So, now I am going to apply this to our next trade, and believe me, we are going right back to catch one of these knives. My account still isn't tradable; hopefully I will be able to do something Monday or the latest Tuesday. I will prepare this weekend for the next round, so check for a post sometime Saturday or Sunday.

Have a great weekend,