Trade recap for March 24th

Okay, I just could not resist … special guest Kermit The Frog (aka me) sings a few lines from his song “Pump & Dump Connection” at the beginning of my video. The second video is the original song, “Rainbow Connection.”

Pump & Dump Connection

Daily profit: $3,354.19

Rainbow Connection

Disclosure: Long 2500 SMCE that I intend to sell near the open tomorrow. No positions in any other stock mentioned. This blog has a terms of use that is incorporated by reference into this post; you can find all my disclaimers and disclosures there as well.

0 thoughts on “Trade recap for March 24th”

  1. In the past, have you tried to play these pumps long using a longer-term strategy? SMCE is a great example. The rationale is that there is a pump that is responsible for the rally from $0.95 to today’s price at $1.50. So why not just grab a small lot now (500 shares), make your stop-loss .95, and then continue to accumulate shares down to .95? You could unload portions of your long position for every 10% rally (or something like that), trail your stop, and take a loss if necessary.

    I would think this type of strategy would work out over the long haul, but you would probably know much better. It would get you long on pumps like NXTH and MSEH that would give you thousand-percent returns, more than making up for the occasional 40% loss on failed pump rallies. Your downside is limited to a small percentage (like 10-50%), whereas your upside is unlimited. Over a large series of trades, this would seem to work out. Especially with your knowledge of “prestigious” pumpers, and only getting long on their pumps.

    Have you tried this “buy good pumps w/ stop at the breakout point” strategy before? The math just seems to work out.

    2/26: Buy MSEH $1.80, stop $1.45.
    3/1: Buy MSEH $1.60, same stop.
    3/2: Buy MSEH $1.70, same stop.
    3/3: nothing
    3/4: nothing
    3/5: nothing
    3/8: nothing
    3/9: sell 10% $1.90
    3/10: sell 10% $2
    3/11: nothing
    3/12: nothing
    3/15: sell 10% $2.20. Move stop to breakeven.
    etc. continue taking profits and trailing stop

    Basically averaging down, selling into the rallies slowly, and setting the stop at the pump breakaway point. If the pumper was good, it would seem to be an interesting strategy at least.

    1. Aaron – how do I know which pumps are good beforehand? I have seen supposedly good or hot pumpers pump stocks that then tanked hard immediately or very quickly. RCYT is a good example, not even the worst; it went up one day from .21 to .27 and the next day it went right back down and was soon under .13.

      The expected win rate from the strategy you propose is maybe 1% and it doesn’t take many 50% to 80% losses to make up for an occasional 100% gainer. There is no way anyone without inside information can make money going long for more than just a day or two pumped stocks.

      1. Thanks! This answers it. Yep- the question was essentially why you don’t martingale a pump with the stoploss at the breakout price. But you’re right- the charts are tanking through those breakout prices too often to make it a worthwhile strategy.

        I heard a few traders who use martingale for news events, with a stop at the price right before the news. Say GGP gets a buyout rumor on the newswires, and right before the news it was consolidating at $15. Now that the headline is out, the price is $15.50. So these guys will buy at $15.50, and then just martingale all the way to $15.01, and sell on the bounces and/or take a loss at $15. They seem to be doing well. So I was just thinking the “news” of a new pumper could be used the same way. But these pumpers are way too inconsistent, it seems. Thanks for the follow-up. Definitely not a good idea 🙂

  2. Haven’t had time watch this video..I must say..You do sound a bit like Kermit but with a Reaper accent. 🙂 lmao

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