I’m not happy with the fact that one of my best ever trades culminating in the perfect outcome occurred during the same month as some terrible stock selections with piss poor timing and loose trade management. That one star winning trade was not enough to carry the load of my series of bad closed trades. July has been a psychological drag on me as individual high and low points have resulted in bringing me back close to where I began the year, but I guess that’s trading. For as far as I’ve come in my trading journey I still manage to find ways to reintroduce myself to the fact that I have much further to go.
July Net P/L: -3.09%
Year to Date P/L: +0.53%
- Receptos (RCPT) +25%, 56-day trade. This was the bright spot of my July. Receptos proved to be a worthwhile application of Occam’s Razor in that the simplest outcome hypothesis is usually the right one. I have no idea how often I heard, “where there’s smoke, there’s fire, and there’s a LOT of smoke around Receptos”. If I piled assumptions and skepticism on top of the facts I likely would not have made this into what it is – my most profitable trade of the year. I employed conviction in adding twice to my original position which became quite large ahead of Celgene’s buyout offer. This was easily the most obvious buyout scenario I’ve ever seen, and I was fortunate enough to benefit from it.
- Apple (AAPL) +9.7%, 209-day trade. I spent the bulk of this trade sideways from February through July where I finally stopped out on July 9’s break under 121.12 on increased volume. The following day’s reversal leading back up to 132.97 sucked after that, but this was ultimately a case of following my rules for this trade to take what I believed to be a logical stop and book a win. I now have a profitable short position going in AAPL which I’m ultimately looking to flip to the long side again.
- GenMark Diagnostics (GNMK) +8.9%, 41-day trade. If you look at the weekly chart of GNMK you’ll see the obvious range trade setup I took in mid-June as I bought near the 2-year support area. I passed on taking the soon to follow move up to 10.84 looking to hold for more further up the range, but that led to red ink as price dropped to within pennies from hitting my cushioned stop just below April ’14’s 8.48 low before reversing up. At that point the trade was beginning to look weaker, so I tightened up my stop to close out with a gain.
- Laredo Petroleum (LPI) -27.7%, 68-day trade. I bought this when LPI was consolidating and pushing on the 40 WMA with increasing accumulation. My saving grace here was that my position size was small to allow for a stop near the 50 DMA which is where price headed soon after I bought it. Had I used a drawn support trendline I would have been out of this five trading days after my entry, but I established a new stop under 12.94 as I extended my rules. From there I had one chance to get out green as LPI advanced above the 200 DMA, but then it broke down from there. I failed to honor my stop before finally selling in early July to take the loss. One of my worst trades of the year. LPI is still falling, fortunately without me.
- C&J Energy Services (CJES) -19.6%, 57-day trade. As I review this trade I see my poor entry point was already after CJES was faltering from the 40 WMA, and it was all downhill after that with another failure to honor my stop. Like LPI, I’m thankful to have taken the loss as CJES continued to break down significantly.
- Nuverra Environmental Solutions (NES) -17.2%, 6-day trade. Another case of a steady uptrend buy at the break of the 200 DMA followed by an immediate collapse and not taking a stop where I logically should have. Being more speculative, my position size was smaller than normal. Outside of that, everything about this trade blew. All I can say is I’m glad I’m not still holding what would be more than a 50% loss currently.
- Bonanza Creek Energy (BCEI) -14.5%, 6-day trade. Having the December ’14 low of 16.36 in mind, I bought this on July 1 anticipating a possible double bottom play (there’s that word “anticipating”). It held for one more day, then it took me five days past that to get my head out of my ass and sell.
- Hi-Crush Partners (HCLP) -12%, 32-day trade. Unlike BCEI, this was a double bottom play that worked. I bought this on June 5 at 27.70, and it was a mostly smooth ride up to 31.98 – that’s +15%. I’ve traded HCLP before which I know to be a volatile quick mover so I had no inclination to tighten up my stop with my sights set on this being a longer-term hold. I was fine with everything that happened until the July 2 into July 6 sudden dive that just froze me in my steps. There’s no excuse for not at least having a break even stop after a substantial gain has been made, much less taking a loss. Due to my lousy trade management here, this one hurt the most.
- Qunar Cayman Islands (QUNR) -12%, 24-day trade. Poor entry, added to my position at a perceived support level, then stopped on the break of that level ahead of a huge nosedive.
- Qorvo (QRVO) -12%, 2-day trade. IBD’s #1 semi stock finding support at the 200 DMA just ahead of earnings? Seemed like running with the strongest horse in the race was a good bet on a chance of an upside earnings play. Weak guidance intervened, down she went, and I bailed.
Oil. Five related positions are not exactly the model of diversification, and that became starkly evident when they were all going against me at once. I was way too overweight in that sector and way too loose with my stops and exits. Receptos patched up the damage that was done, but not enough to help end the month on a positive P/L note. A brilliant trade wasted. Beyond that, I also responded to these losses by booking small gains on other trades out of fear of risking losses in them instead of allowing them adequate time to develop. I worked through that period and have some decent trades going now as I aim to get back on track for a positive August.
The main positive I can take away from this month’s losses is that in the past I would often doggedly hold on in the hope of getting back to break even in situations like those, turning trades into “buy and holds” in order to prove my rationale correct for taking the trade. Now I take the losses (better late than never). Had I held on in these cases, every oil position I sold would have me substantially deeper in the hole right now.
Long – BLDR CVG DATA FANG FB FNGN GNMK HZNP JUNO MBLY PANW SBUX SCAI SWKS
Long Speculative – GST REN SGYP TEU ZIOP
Short – AAPL MAT