Report Card #24

Dear L.,

Last Friday was a pretty good trading day. I waited for my opportunity and executed it when I saw it.

I only traded on ticker, PRAN (Prana Biotechnology Limited, Biotechnology Sector). After an unjustified move on this low float stock on Tuesday, I eyed to short PRAN. When I noticed pre-market that a well-known chat pumping trader was about to buy PRAN, my conviction was even stronger. My plan was to wait for the open and short after a possible stuff move into $2.6/2.7.

The stuff move came and PRAN dropped from a high of $2.91 to as low as $2.55. Having learned from my past mistakes, I did not want to chase this unwind. I planned to scale into my position. I shorted 1/2 position at $2.65 and the other 1/2 at $2.7 into the VWAP move. PRAN did end up bouncing more and I honestly was lucky that my stop above $2.8 was not hit when PRAN hit a high of $2.79. However, this lower high was all that PRAN could do and it was weak for the next hour. I covered 1/2 of my position into the wash at $2.54, covered 1/4 at $2.55 a little later and finally covered the last 1/4 at $2.46.

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I am quite satisfied with this trade. Even though I eventually want to enter more aggressively on the stuff moves, I am happy about how I followed my plan in both scaling in and out of this trade.

Given my goal of improving consistency and R/R this day receives a B-.

Best,

Nils

Report Card #21, #22 & #23

Dear L.,

after a weak of sitting on the sidelines, I´m finally back. Monday & Tuesday I did not put on any trades. Wednesday was the 4th of July holiday and this morning I did not see a lot that interested me either.

Later in the morning however, a chat room pump helped me out of this misery.

CCCR (China Comercial Credit Inc., Credit Services) announced the entering into a non-binding letter of agreement with Lexiang Technology according to which CCCR will acquire 100% of the outstanding shares of Lemon Green Inc. “non-binding” & “letter of intent”? You see, these were no news of considerable substance. CCCR started a meteoric ascend however, hit the circuit breaker halt and reached a high of $1.68 from around $1.15 earlier in the morning. Directly after hitting its highs, the unwind followed and CCCR flushed below VWAP. I located shares and promised myself to be patient. Since CCCR seemed very weak, I put in my short order at $1.43. I indeed get filled and CCCR bounced up to VWAP – I was too early again. VWAP rejected however and the bagholders took over. CCCR experienced one red candle after another one. I took half my shares off at $1.33 and the other half at $1.28 just before a washout to $1.24

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It is good to be back with a win. As so often however, my entry still was too early. Furthermore, given a stop above $1.50, a basically had a R/R of 1. I keep referring back to this issue and I am still thinking about how to improve this flaw.

Today´s trading was quite good and I´d give myself a C given my goals of improving consistency and R/R.

Best,

Nils

Report Card # 17, # 18, #19, #20

Dear L.,

even though I should have written this report card daily, something happened last Tuesday that made me rather reluctant to trade for the rest of the week or even review my trades. A few days later, here I am, and I think it is very important to review what happened.

Last week it seemed as if every low float stock went parabolic. News? Not needed! Strong fundamentals? Who needs that? If there was a sub 10 million float, it was very likely that the stock was to be manipulated. However, being aware of these manipulations, traders obviously have to manage risk accordingly and I failed to do so on Tuesday.

One of last week´s hot stocks was CLDC (China Lending Corporation, Financial Sector). Not having seen any volume and volatility in previous weeks, this is what the stock did last week.

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Tuesday, on day 1, there were no news justifying this price action. I thought CLDC was a typical one-day pump and dump and set out to short it as in previous opportunities.

Yes, I come back to this topic again and again but while my overall trade thesis was ok, the most important thing, my entries and exits were terrible.

CLDC spiked from $2 to $4.6 where it seemed to top out. Then, there was one big red candle right into VWAP. What did I do? I saw this as the “beginning of the end” and shorted CLDC at $3.9. Let´s summarize here, there was a red candle, into support (VWAP) on no significantly higher volume and I shorted right at support. Obviously, CLDC bounced directly and I was under water. How should the entry have looked like? Well, I could have waited for a clear fall through VWAP to short a little later. At least, I would have seen a clear confirmation then. With my entry, I was directly underwater. CLDC tested support at VWAP once more, before it bounced and shortly broke the high of the day. I got stopped out at $4.42. CLDC however, failed to reach no highs. These two green exhaustion candles actually indicated a rather bearish development and presented a great short entry opportunity. Two big red candles followed, and I chased my entry yet again, shorting at $4. What I have said before can be repeated here. I could have shorted the high of the day fail, the definite crack of VWAP or a possible bounce. Instead I chased. With my terrible entry, I chose a stop at $4.4 yet again, even though it had been shown to be not effective just a few minutes before. To show me how stupid this was, I got stopped out just before the next stuff move at $4.4. From this level, CLDC should reach a low of $3.4 within the next 30 minutes.

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CLDC however found support and squeezed shorts later in the day again.

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On these two trades I basically lost what I had gained in the two sessions before. Thus, even though the losses were not terrible, the sheer stupidity of these entries made me seriously doubt myself for the rest of the week. Terribly entries and terrible stops: this was a clear F grade trading day.

Best,

Nils