AREX taking profits on the way up, and down

AREX is one of my favorite stocks at the moment, as it has nice clear movements up and down. I'm not getting the timing right though - could have made double the profit on both directions on these trades.

The first long trade was 3% profit in 4 days, the second 6% in one day, thanks to yesterdays crash. This is the daily chart.

PANL Huge 100% rally, and then what?

After a huge 100% gain in the last weeks, I thought the price might collapse again, so I took a short position.

Things weren't developing clearly, so I exited while in positive territory with 1.5% profit in 3 days. I still think PANL is way overbought, so will watch for signs of a definate collapse. There is a lot of hype out there around this stock, and the Vice President sold $750K of stock yesterday, so it could still happen.

FACE Bought to Cover @ $4.80 5% profit in 5 days

Closed FACE short position with 5% profit in 5 days. FACE still looks oversold, but this trade hit the target of 1% profit per trading day, so I'm not being greedy and closing it out. As you can see from the chart, FACE either jumps around wildly or does almost nothing, so take my philosophy is to put the profit in the bank before it makes another wild jump in the wrong direction. This stock is very lightly traded so even though these quick gains are possible, trying to trade more than 1000 shares at a time is going to mean fills are uncertain.

This is the third FACE trade I've made which made 5% in 5 days.  All three are shown on the graph below.

5% in five days - closed today
5% long day trade - Jan 3
5% short day trade - March 3

In hindsight a buy an hold with an opening price of $3.55 and a sell at $5 would have had a profit of 40% in two weeks.  But on a small, thinly traded and insanely volatile stock like FACE, the psychology of how much profit to take and when to take it would have driven me crazy. Plus there was no real indication of a sustainable uptrend in this chart.  I prefer the control of timing moves in one direction and banking the profit immediately.

FACE quick 5% 1 day profit

This is the second time in just over a month that FACE has presented the opportunity for a 5% day trade. The first one was a long trade on January 20

FACE tends to trade very low volume, with occasion wild 10-20% spikes or drops in price. If you can use these to your advantage there is money to be made for a small trader. There is almost no interest by institutional or larger investors in a stock like this, because it's such a small company. It's also 44% insider owned, so I suspect these wild swings are when one or another of the board or executive team wants some cash and dumps some shares. You can't use any stops, trailing stops or triggers on a stock this volatile or lightly traded. It's just taking advantage of a situation when it arises and getting in and out fast. I'm actually surprised they TDAmeritrade let me short the stock at all.

I had an alert set on FACE to trigger if the stock traded over $4.20.  By the time I spotted the email it was already trading at the days high of $4.49. Quick risk assessment and I was in short at $4.39. Ten minutes from seeing the alert to placing the trade.

2 hours and six minutes later I sold 50% of the position for a 5% profit. Target for the remaining 50% is down by the purple moving average over the next 5 days.

Here is the 5 minute chart to see more clearly how the days price action worked. This stock is so lightly traded that you can actually see my order as in individual bar on the graph - the only trade at that price within that time interval.

I timed the entry on this AGNC short trade perfectly

I timed the entry on this AGNC short  trade perfectly, but tightened up my trigger way to much when it started to show some profit. So I came up with some revised rules about how to set trade exit triggers. Triggering too early in this AGNC short trade, I covered my commission, but then adjusted the trigger too soon and too tight. The trigger closed the position at a negligable profit, but the next day there was a huge gap down to the price that would have allowed taking a 3% profit in only 3 days - which is right on target for my desired profitability of 1% profit per day in the market.

First cover your commission, to make sure you are not preoccupied with commissions eating into your profits because of trading too much. If you a just a small investor where you are measuing the success of a trade in how it compares to paying your monthly electricity bill, this is a factor, even with $10 commissions.  


Next set the trigger to about the Average Daily Range above the closing price, on a daily basis for the sort of momentum/swing trades I do.  On the AGNC trade, this would have been about 40c above the Friday close, so $28.98. That would have locked in a good chunk of the gap down, but leaving some space for the likely volatility that may occur because of the sharp dip in price.

Closed EMC short trade 2% profit in 2 days

This was a short term swing trade taking advantage of a clearly oversold EMC. In the graph, I showed the channel that EMC has been trading between for the last few months.

The recent rally took EMC both out of this channel, above both 8 and 17 EMAs, through the upper Bollinger Band, and to RSI of 93. There was almost no way that EMC was going to break out further from this combination of oversold indicators.

However, I need to work on my fear of giving back profits, as I should have trusted this to come down much further before selling. The quick profit I did take kind of came almost too easily, so I decided to just take it an run. I'm just so nervous about the market action in general right now.

Closed AGNC short trade at $28.10 5% profit in 5 days

This trade worked out pretty nicely, although I could have waited a day later to enter. I had anticipated this AGNC short trade some time ago in a previous post, after observing that because of the large dividend payouts every quarter, the stock drops by exactly the $1.40 dividend amount every time they pay out. So why wait for the dividend when you can short the stock just prior to the record date, and make the dividend as a short sale in a week or so rather than waiting months to get your dividend. Your money gets to work somewhere else for three months.

My plan was to exit when the candles penetrated the lower bollinger band, but the market is on a strong rally this week. Making money on a short trade while the market is going down is one thing, making money on a short trade while the market is moving against you is another.

So I decided that 5% profit in 5 trading days was OK. Effectively, I was getting paid the AGNC dividend in 5 days, rather than waiting three months like a traditional dividend investor would. I'm not convinced that a company paying out so much cash every quarter is destined to last at these pay out rates anyway.

I also made money trading AGNC midway through the summer (see the earlier post), so it has been treating me well in the choppy sideways market of the last few months.