Before I get to day two, I should start off with the night before day two. Not knowing a lot about day trading, not even knowing if it is one compoud word or two indvidual words, I decided to do some research on different stocks. For that one or two word thing, I guess I should check MLA or Chicago style books for writing to be sure.
I can’t even remember all of the stocks I checked out this evening. I began my research by checking out the biggest losers on Wall Street that day. I then checked out the charts for each stock over the past six months or so. I looked at each day their share priced dropped off sharply. I then looked at the next day to see if it rebounded. I found plenty of stocks that fell drastically that day, but only about 8 that I could afford to buy about 200-250 shares. I thought if they could go up about .20 a share, I could make $40-50 on that stock in minutes, minus commission of course.
I narrowed my choices down to four stocks, all of them looked good. I even had a mortgage company in the mix which seemed to have crashed before the big sub-prime scandal that killed the market this January. I decided to purchase Kosan Biosciences. It had opened the previous day at $5.55 and closed at $3.31. Talk about drastic loses. I just looked back at their chart for the past six months and figured I didn’t do such good research. Their stock had never rebounded that well the day after losing ground. I think I was just attracted to this stock because I figured they must go back up after losing so much. The odds were probably pretty good for that. Unfortunately, the stock market isn’t a place for amateurs to play hunches. So I bought 250 shares @ $3.45 and sold it @ $3.58 thirty minutes later. Minus commission I made $18.00. A whopping $36.00 an hour minus the time for research, if only I’d stopped there. Kosan, fifty days later, is selling for $2.63 a share. Glad I wasn’t investing for the long haul.
Just to make this trade and the subsequent trades this day, I had to do a lot of juggling of my schedule. When all that was worked out, I sat down at my Starbucks, my heart started throbbing, my blood pressure already bad, I felt like it was skyrocketing as the opening bell drew closer. I really had not made up my mind which stock to buy first. I’m sure there have probably been studies done on stock traders, those on the floor in NY and those sitting behind their computer screens with the hopes of making lots of money in a short amount of time. I guess the stress would be lessened if I didn’t need to make money. If my brokerage account had play money in it, if I could afford to lose it all, the pressure may not be so great.
After my trade, I felt a tinge of pride. I should have stopped and gone home. I could have told my bride how smart I was for picking a winner. But I had to make another trade and then another. One of the four stocks I had settled on buying was American Mortgage Accepance Company (AMC). To make a short story shorter, I bought 250 shares @ $2.62 and sold it at $2.42. All this was done in just about 20 minutes. I had read that when you buy a losing stock, sell it immediately. Why didn’t I do this? I just looked to see what it is trading almost two months later, it’s at $2.42 but had gone down in early January to .72 a share. So for 2008, the stock is up 122%. To bad we couldn’t have all bought it at its low point.
Only out $50.00 on AMC, I decided to buy some more. I bought 250 shares of Blockbuster (BBI). I think this was the only stock I bought in two days in which I heeded the good advice given all daytraders — get out if it starts to fall. I did and the shares only fell 1.8 cents before selling. I just lost my commission money. Today, I checked out BBI and it’s @ $3.12.
In my next post, I’ll tell you how and where I exactly got lost and began investing and left the world of daytrading.
