Total profits in 4 weeks: 21% of total capital employed
Profit in week 4: 1.5% of total capital employed
Bad week: overall gain gives some comfort
Perspectives on week 4:
As with everything, I got my big loss day on 5/19. Lost 7% of initial capital in one day. Thats the amount I usually gain in a week. Though, it wasn't all my fault - do I see myself falling into excuses?!
So, Morgam Stanley had decided to sell its stake in MCSI, the "index company". It was to be sold at $21.50. That morning, I woke up late to the alarm (being on the West Coast, I wake up 45 minutes before the market to pick stocks fro the day). That day, I woke up just 20 minutes before the market. In a hurry, I read the Morgan Stanley news as "MCSI decides to issue new stock in a secondary offering". Assuming that the stock will go down (as it does with all secondary offerings), I shorted some MCSI stock.
But in reality, the stock went up to match the $21.50 figure that Morgan Stanley had given. I noticed this up rally and tripled up on my shorts hoping that the rally would end and the stock would move in the direction that I want it to move. It never did.
I then looked for the reason and read all the news again and discovered my flaw. Immediately i closed all my open positions albeit at huge losses. It was a bad day.
Leassons learnt: Wake up early. If you arent up early, then dont trade. Read and understand news properly. Confirm news from a few other sources.
The next day however, was my best day till now. I gained 5% in a single day. I caught SAIC in an artifical 52 week low (on 5/20 SAIC started going down without any reason and reached a 52 week low - all this despite the news the previous day that SAIC had landed a $100MM defence order). The reversal took place the same day. From a 52 week low, the stock went up to a week high and a nice windfall for me.
Lessons learnt: Check google worst price losers - sometimes they are opportunities.
5/22 was an interesting day. Sears gave a profit surprise and Salesforce gave bad news. Ideal candidates. Sears has been volatile today and is looking to stabilize below the opening price while Salesforce is not going down as i had predicted. However, the early morning movements were in line with predictions and I was able to make some profits on them.
Lessons learnt: Big companies may not follow the initial morning trends through the day - especially when the total market is looking for a direction. Open and close positions quickly.
