Never ever trust online reviews of mattresses or trading services

I just read this excellent story on Casper and the world of online mattress review websites and that made me of course think of stock trading services and what happens if you try to find reviews of them. Unlike with mattresses, where a $50 affiliate commission is quite common on sales, with stock trading services commissions of 25% to 33% are common and they can go much, much higher. Also, with mattresses, even if you end up not particularly happy (as I am not that happy with my Helix Sleep mattress) at least you end up with a functional, new mattress. If you sign up for many trading services you will end up trying to learn to trade from somebody who fakes their own trades or lied about their own trading record. Even if you find a trading service that has a good track record and the person running it knows how to trade successfully, the odds still favor you losing money — because trading successfully is very hard.

Did you read the article on Casper and Sleepopolis at Fast Company yet? If not, do so now. The problem with the mattress review world (and I think this is a general problem for any product where online reviews can make or break them) is that the incentive for mattress companies is to do whatever is necessary to get to the top of rankings, no matter how. They can do that by incentivizing the reviewer with higher affiliate payouts or by giving the reviewer extra payments, such as a consulting agreement or some other payment scheme. The reviewer is incentivized to direct more people to the company giving him or her the highest payouts. The result is that the reviews for mattresses become completely untrustworthy — some review sites might be slightly biased, others might be totally biased, but it is hard to tell the difference. Of course the solution to this is to get a subscription to Consumer Reports which doesn’t have these conflicts of interest (I’m a happy subscriber and have been for a decade). Here are their mattress recommendations.

Unfortunately, Consumer Reports does not rate trading services or Twitter traders. Tim Sykes started Investimonials.com for the purpose of getting traders’ reviews of trading services but really that site never took off and never got much beyond the penny stock niche. And of course user reviews can be gamed, most obviously on Amazon.com. Even without monetary payments, a service provider can urge satisfied users to write reviews and thus increase their rating. Still, there is useful information in user reviews sites like Investimonials (or Yelp) — the user just needs to expect a positive bias and seek out both positive and negative reviews and read them in detail. If there are no negative reviews then that is a red flag — even the best businesses leave some customers unhappy.

And of course, this is just talking about half the problem — service providers offering reviewers inducements for positive reviews. They can also threaten libel lawsuits to eliminate negative reviews. Or they can pay the review website to remove negative reviews. This is quite possibly a worse problem and will cause the most negative reviews to tend to disappear from the internet. It is impossible to know how big of a problem this is.

Of course, one way to get around the problem of fake or gamed user reviews and the threat of lawsuits is to have a convicted felon with a huge judgment hanging over his head that he can never hope to pay write trading website reviews. But such a site (which exists, but I won’t link to it for reasons I explain below) can still suffer from the tendency to give positive reviews to services that then advertise with it. And the specific website I’m thinking of, while doing a pretty good job of identifying many frauds, seems to think that some legitimate (in my eyes) services are complete frauds. For that reason I won’t link to or even name Emmett’s website.

Why don’t I write reviews of various trading services? I learned a bunch from Tim Sykes and a couple other trading services and I obviously wouldn’t be able to be bias free. That is why I have not reviewed trading services that I have tried; the only times I have written about trading services is when I recommended them (at some point), or had some other reason to write about them (such as when a trading service was owned by stock promoters).

What can you, an aspiring trader, do? First, never trust claims of good performance. Anybody can claim that they turned $3,000 into $10 million. Ask to see some sort of real proof. Even more, look at a person’s trades and verify that they were possible and weren’t in illiquid stocks. No matter how positive your initial impression of a trading service, search out negative opinions (luckily, there are plenty of those on Twitter about everyone) and weigh those against the positive opinions you see. There are plenty of invalid criticisms as well as valid criticisms out there.

Unfortunately, there are so many people looking to get rich through trading that you likely will have no luck if you ask for account statements or tax returns to prove a guru’s performance (but I have some). Even after looking at a number of trades, it can be hard to tell if someone is a good trader — particularly over a short period of time a trader can be successful just because of the niche they are in. In a crazy bull market most swing traders will look great. Caveat emptor and do your own research. Most importantly, never blindly follow another trader — no matter what guru you follow, even if he or she is talented, you are likely to lose money just due to slippage.

Unfortunately, the only way to decide with high confidence if a trading service is worthwhile is to subscribe to it for months and assiduously track the trades of the guru to confirm that they are realistic and that they are consistently profitable. I even subscribed to Anthony Davian’s trading service for two months before concluding that he likely knew less than I did. In addition to that, you need to analyze their trading strategy to determine that it makes sense and that you could conceivably implement it yourself.

 

Disclaimer: I have a long and deep business relationship with Tim Sykes; see my full disclosure. I own a Helix Sleep mattress and subscribe to Consumer Reports. I have left a number of reviews on Investimonials but haven’t written any in years. No position in any stock mentioned and I have no relationship with anyone else mentioned in this post. 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.

 

How to be dead wrong about Kalobios Pharmaceuticals $KBIO

Needless to say, my previous post on KaloBios Pharmaceuticals was dead wrong. Martin Shkreli and friends bought up the majority of the company over the past couple days (at under $2 per share on average) and their SEC Form 4s after the close yesterday caused a massive short squeeze that sent the stock up to $24 in premarket today. The one thing I did not account for was the possibility that someone would see value in the company’s drugs and rescue the company. That is essentially what Shkreli is doing, as he explained to Fierce Biotech. In the future I will avoid any such overnight shorts on companies with substantial intellectual property even if I think it has little value, particularly if the market cap of the stock is low. Even a small risk of a catastrophic loss on a trade is too much.

I apologize for completely failing in my analysis. Luckily I had set up an alert for SEC filings on KBIO so I was able to cover my short for a small loss (around $4,000 net) at $2.0833. Hopefully my readers also avoided catastrophic losses. If you look at my trades on Profit.ly you will see a large loss at IB but a slightly smaller large gain at CenterPoint Securities. It is quicker for me to trade at CenterPoint so I just bought there at first to get flat.

Below is a screenshot of my posts in TimAlerts chat mentioning my cover and the news:

KBIO_chat

See all my posts here.

Disclaimer: I have no position in KBIO but I will likely trade it after posting this article. I have a close business relationship with Tim Sykes (see Terms of Use for details). I have no relationship with any other parties mentioned above. 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.

A Short blog post of much importance

If you come across a bear and decide to run, what matters is that you run faster than the slowest person you are with, not that you be able to outrun everyone you are with or outrun the bear. This same sort of logic applies to trading, too. You don’t need to be the smartest (or fastest) trader around, just smarter (of faster) than enough people with enough buying power to move stocks.

 

Disclosure: 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.

What is your edge: Real estate edition

As a hobby I dabble in real estate. It is quite different than day-trading stocks in many respects but it shares some important characteristics, the most important of which is that to consistently make money you need to have some edge. I wrote about the importance of having an edge in my classic blog post So You want to be a trader? The potential edges you can have in real estate are similar to the potential edges in trading. Here are the most important:

  1. Be able to buy when others are not able or willing to buy.
  2. Know what others don’t know
  3. Have some special skill or combination of skills that others don’t have

The key to making money in real estate is to buy low — every other way you can make money in real estate is a lot harder. Over the last 8 years it has been possible to buy lots of houses / condos at distressed prices from banks that just wanted to get rid of the properties. To buy many of these properties, you need to be able to act fast and often you need to be able to pay cash. Also, a bank may not want to deal with the hassle of evicting the borrower they foreclosed upon so the buyer needs to be willing to evict that person if necessary. Also, buying a property that is occupied means not being able to inspect the property, which increases risk. There may be title issues with the property. Many bank-owned properties are auctioned on websites such as Auction.com or Homesearch.com.

The first house I bought for speculative purposes I purchased last May. The house had had only one owner and the former owner was still living in the house. The house was sold in a cash-only auction. The bank selling the house was not a local bank so it did not know the local market. Furthermore, the auction incorrectly listed the square footage of the house and omitted the completely finished daylight basement which easily added $15,000 to the value of the house. Everything went right with the house, including the bank paying the former owner to leave just days before I closed on the purchase. The interior was in great shape except for worn-out carpets. I ended up renting out the house for most of a year, having it fixed up (with me doing some of the simple work and paying contractors to replace all the carpet, install a granite countertop in the kitchen, and do some landscaping).

After everything went right, I ended up selling the house just over a year after I purchased it for a profit of about $15,000 to $20,000. That is not bad but the house also sucked up a good chunk of my free time and I probably could have made more money just spending the time working on improving my trading.

One good thing about buying such distressed bank-owned properties is that there is minimal due diligence possible and it can easily be done online — so there is little cost to investigate and put in lowball bids on many properties. And while lowball bids will fail most of the time, they will occasionally work, especially if the person in charge of selling the property is motivated to just sell the property as quickly as possible. In fact, my winning bid on the house I flipped was below the reserve price in the auction.

The same thing that can lead to getting a good price can also lead to large losses — just like in trading those without skills or who take too much risk will lose money.I came upon a few interesting condos in Chicago that are being auctioned off this weekend so I started my due diligence. One property I came across was

1221 N Dearborn St # 1408 Chicago, IL 60610. I thought it might make for a nice little pied-a-terre in the Windy City so I decided to bid. It is listed as being bank-owned on the auction page, but oddly enough there is no bank in the chain of title. Rather, the condo was sold just three months ago in a standard private party sale (with warranty deed). If the property was listed incorrectly due to a typo and I could see which unit was actually being sold in the legal description (ideally a larger unit) then this would be a great opportunity to buy cheap by knowing what no one else knows. Unfortunately, Auction.com doesn’t disclose that (or even the identify of the seller) and the ‘agent’ listed is a property management company that has not been kind enough to reply to my inquiry. Furthermore, a deed search revealed numerous foreclosed properties in the building. So if a bank is trying to auction off something they don’t own (I’ve seen that happen before) then it would just be a waste of my time to bid and potentially a waste of money.

 

8/13/2015 17-04-224-047-1173 WARRANTY DEED 1522541027 SEGURA ROBERT FLANDERS JODI S
10/19/2011 17-04-224-047-1173 LIS PENDENS 1129241025 CHICAGO THE TOWERS CONDOMINIUM ASSOCIATION
9/28/2007 17-04-224-047-1173 CORRECTION 0727144006 TOWERS CONDO ASSN PUBLIC 071422072
12/13/2006 17-04-224-047-1173 AMENDMENT CONDO DECLARATION 0634731033 TOWERS CONDO ASSN PUBLIC
5/11/1998 17-04-224-047-1173 ASSIGNMENT 98387365 TOWERS CONDO ASSN OAK BRK BK 25169127
8/10/1994 17-04-224-047-1173 WARRANTY DEED 94709841 SEGURA JULIE GAL-SEGURA JULIE
6/21/1991 17-04-224-047-1173 LIEN 91303438 MUELLER PAINTING & DECOR GANZ ROBERT
5/29/1991 17-04-224-047-1173 RELEASE 91254064 IMPERIAL FED SAV ASN MALEY MICHAEL P 86443648
10/18/1989 17-04-224-047-1173 ASSIGNMENT 89493921 ICA MTG CORP IMPERIAL SAV ASN 86443648
5/2/1988 17-04-224-047-1173 WARRANTY DEED 88184221 MALEY ELLEN S SEGURA JULIE
1/27/1987 17-04-224-047-1173 RELEASE 87052828 CONTINENTAL IL NATL B&T MALEY MICHAEL P 26899033
9/29/1986 17-04-224-047-1173 ASSIGNMENT 86443649 MIDWEST FUNDG CORP ICA MTG CORP 86443648
9/29/1986 17-04-224-047-1173 MORTGAGE 86443648 MALEY MICHAEL P MIDWEST FUNDG CORP 91254064

Disclosure: I have used both websites mentioned in this blog post and I may bid on the property described in this blog post. I have no relationship with any parties mentioned above. 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.

Riviera Tool Corp $RIVT does a NEST

When people ask why I prefer to trade penny stocks and preferably OTC stocks, my answer is that I prefer to trade against people who are less intelligent and experienced than I am. Considering all the smart people working at hedge funds I would likely be less intelligent and less experienced than the people trading big money on real stocks like Apple and Tesla. But every once in awhile the amount of stupidity I see in the trading of a stock astounds even me. Riviera Tool Corp (RIVT) is a recent example of this.

What happened with Riviera Tool Corp (RIVT)? After the market close on Wednesday, May 6th, the Detroit Free Press reported that Tesla (TSLA) was buying “Riviera Tool” of Grand Rapids, a tool and die supplier to Tesla. After Riviera Tool Corp (RIVT) started spiking Jason Shubnell of Benzinga reported the acquisition and specified that it was Riviera Tool Corp (RIVT) that Tesla was buying, which was wrong — it was Riviera Tool LLC that was acquired. Riviera Tool Corp had all its assets seized by creditors back in 2007 and had been an empty shell since then. For summaries of exactly how there came to be a public zombie shell Riviera Tool Corp and a private Riviera Tool LLC, see this SeekingAlpha article. After the market close on the first day Riviera Tool Corp was halted by FINRA (U3 halt)  and it remains halted as I type this. See the intraday chart of RIVT on the day it spiked.

Back in 2013 a similar situation happened with Nestor Inc. (NEST) after Al Gore talked positively about Nest (maker of the Nest learning thermostat). Dumb investors/traders bought the stock of Nestor, which at the time was essentially a shell company with no assets, thinking it was Nest Inc. Take a look at the intraday charts of NEST over the three days it ran up and then dumped back down (days 1 and 2; day 3). Here is a description of what happened. When Google acquired Nest in early 2014 Nestor Inc stock had another run. The NY Times Dealbook had a nice description of what happened then.

The Nestor / Nest confusion wasn’t even the only time that happened in 2013. In the same month that year there was lots of talk about Twitter (TWTR) going public and the company started filing paperwork for its eventual IPO. Traders then bought stock in bankrupt (and essentially worthless shell) Tweeter Inc (TWTRQ) and the stock shot up from 1 cent to 14 cents. Even after the first run up and a halt to change the ticker to THEGQ so that people would not be confused the stock had a second run up two weeks later and ran from 2 cents to 10 cents.

 

Disclaimer: This article has been edited to show that NEST had two separate dumb runs after news of Nest Inc. I am short 15,000 shares of RIVT at Interactive Brokers that I will look to cover when it reopens for trading. I have no relationship with any parties mentioned above. 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.

Global Gaming Network (GBGM): First the pump, now the big dump

The GBGM pump has been one of the more interesting pump and dumps of late. It started on Friday June 8th around the open with pump emails from PHD-Trading.com (disclosing $200,000 in compensation). I thought the email was simply spam because I could not remember ever signing up to pump websites with that email ([email protected]). I thought that email address had simply been scraped off of TimothySykes.com (where it used to be displayed on the chatroom rules page). Only much later  that day did I get around to actually looking and I had only ever received one pump email to that email address, from ThePennyStockJerk.com, a website affiliated with BestDamnPennystocks.com. All the BDPS websites had already sent teaser emails talking about their new low-float pump that they would pump Monday at the open (for BestDamnPennyStocks.com and a few premium email lists) and at the open on Tuesday (all the other websites).

It was the strong price action of GBGM that made me look into it — plus Jarmall’s questions about GBGM that convinced me that the price action was not indicative of a pure spam pump. That led me to sign up to the free email list of PHD-Trading. The welcome email I received shortly thereafter was quite informative. At the bottom of the email, the name and address (as required by the CANSPAM law) was GS MEDIA | 2885 Sanford Ave SW #16525 | Grandville, MI 49418. I know from my pump research that GS Media is one of the legal entities tied to BestDamnPennystocks.com (BDPS), which of course was scheduled to have a new pump the very next trading day.

I thought this was a good opportunity to potentially front-run the BDPS pump, so I tried to find any other links between PHD-Trading.com (and GBGM) and BDPS. One link was that BDPS had sent teaser emails saying that their upcoming pump was a low-float stock. GBGM, while having tons of shares outstanding (461 million!), had its float listed as 1.2 million shares on OTCMarkets.com. Another connection was the fact that PHD-Trading.com had both a free email list and a paid product, sold through Clickbank — while there are other stock promoters who sell access to a ‘premium service’ through Clickbank, none has used it as extensively as BDPS. There were other links as well, but I won’t disclose them in a free blog post.

I have front-run BDPS pumps in the past, and it is a risky thing to do. It worked well once and another time they delayed the pump, likely because I had front-run it. I am fairly sure they have delayed other pumps when they were frontrun. However, when I first remember hearing about their HoleinOneStocks.net website back in autumn of 2010, the premium subscribers got one pump a full day before any other BDPS websites (since then they have never gotten a pump earlier than the main BDPS website, so don’t up for them!). If PHD-Trading.com was truly a new BDPS-related website then it would make sense that they woudn’t delay the pump. I bought 40,000 shares at .265, taking a substantial risk (if I was wrong and BDPS didn’t pump GBGM then I would likely lose 50%). I shorted 5,000 shares at Interactive Brokers at .29 to reduce my risk prior to the close and then held over the weekend, selling into the opening spike Monday.

Here is my long trade:

Partly because of me shorting at .29 on Friday and partly because I made some stupid trades, I lost $766 on subsequent trades on GBGM. Click the links to see them: trade 2, trade 3, trade 4, trade 5, and trade 6.

As with almost all BDPS pumps, GBGM has now dropped big from its highs just a week ago and is now well below its price at the beginning of the pump. As with all pump and dumps, it will go even lower in the long run. I do not recommend buying pumps or trying to front-run pumps — those are both very risky and most people who try it lose big. The easiest profits anywhere are from shorting pumps, particularly from the worst promoters. For example, after 41 trades this year shorting the pumps of crappy pumpers, I have made $8800 and my dollar-weighted average profit margin is 11.15% with no losses over $90. (I have had a bad year short selling and have actually lost $1900 on my pump shorts not including my crappy pump shorts or the $8400 I have made with longer-term pump shorts.)

Below is a listing of all the compensation listed from various promoters that I have seen on GBGM. The total compensation is certainly lower than the total disclosed below because some promoters have paid part of their compensation to other promoters.

First are the various legal entities / groups that comprise the BestDamnPennyStocks.com group of pump websites.

BestdamnPennystocks.com (BDPS) discloses, as usual, the most compensation:

BestDamnPennyStocks.com expects to be compensated $500,000 Cash by a non-controlling third party for a GBGM investor relations services.

There is JackpotPennyStocks.com, an affilaite of BDPS:

JackpotPennyStocks.com expects to be compensated $20,000 from a non-controlling third party for GBGM Investor Relations services.

Another group of BDPS-affiliated websites, exemplified by GetRichPennystocks.com, was paid $30k:

GetRichPennyStocks.com expects to be compensated $30,000 cash from a non-controlling third party for GBGM Investor Relation Services.

PHD-Trading.com started the pumping last Friday and prior to that no penny stock traders I know were aware of the website and it appears that got their email list from some other pumper. They have their disclaimer as an image, copied below the quote:

PHD-Trading.com expects to be compensated two hundred thousand dollars for GBGM advertising investor relations services.


(click image to embiggen)

StockMister.com is a 2nd-tier or 3rd-tier pumper that is run by the same company as StockExploder.com (which of course disclaimed the same compensation). Here is its disclaimer:

StockMister.com’s parent company Micro-Cap Consultants, LLC has been compensated up to Two-Hundred and Fifty Thousand Dollars Cash by a third party (Online Marketing Media LLC) for a 1 Week Marketing Program regarding GBGM, Micro-Cap Consultants, LLC has also been promised an additional compensation of up to Two-Hundred and Fifty Thousand Dollars Cash by the same third party (Online Marketing Media, LLC) for the same 1 Week Period of Marketing Efforts regarding GBGM.

Stockmister paid for IPR Agency LLC (see my prior blog post about Tim Sykes looking to sue them for libel) to promote GBGM as well:

We have been compensated up to eighty thousand dollars to conduct one day of investor relations marketing for GBGM by a third party, StockMister LLC.

StockLockandLoad.com is run by a pumper who also runs StockBomb.com and Pennystocklocks.com and Stockrockandroll.com.

StockLockandLoad.com has been compensated twenty-five thousand dollars for this one-day profile on GBGM by MJ Capital, LLC.

Another pumper is Pennystockcrew.com. They win the award for smallest font used for a text disclaimer:

Penny Stock Crew has received $20,000.00 in cash compensation from Hunter Marketing LLC for the one day profile of Global Gaming Networks […] Penny Stock Crew is owned by: ODD Marketing LLC , 433 Plaza Real Suite 275, [Boca Raton, FL] 33432

PennyStocksProfile.com is a small-time pumper most noted for riding the cottails of AwesomePennystocks.com pumps SNPK and GWBU this year. Unfortunately, they use an image rather than text for their disclaimer, which makes me retyped it. The image is copied below the quote.

PennyStocksProfile.com is owned and operated by PLVP LLC. The company has been compensated $10,000 by Online Marketing LLC for publication of this information.


(click image to embiggen)

Another annoying pumper is Investors Alley Inc. (a Quebec corporation) group of at least six websites that used an image to show its disclaimer:

Please be advised that Investor Alley Inc. expect [sic] to be paid up to twenty five thousand dollars from a third party- Micro Cap Consultants – to perform promotional and advertising services for a one day profile of GBGM.


(click image to embiggen)

Stock Connection is a 5th tier stock promoter with a number of websites, including PennyStockPickAlerts.com:

PennyStockPickAlert has agreed to be compensated fifteen thousand dollars for a three day public awareness marketing campaign for GBGM from the third party InterVcap LLC.

Another pumper that promoted GBGM is GlobalInvestmentAlert.com, with which I was not familiar prior to this pumps:

GIA, Inc expects to be compensated up to $100,000 by CF, Inc for one weeks coverage of GBGM.

 

 

Disclaimer: I have no position in any stocks mentioned and I have no relationship with any people mentioned, except for Jarmall who is a member of Tim Sykes’ Trading Challenge (I work for Tim with that). I trade pump and dumps and OTCBB / Pinksheets stocks. 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.

We are all in this together … or not

Whenever you hear that phrase, “We’re all in this together,” be very, very cautious. That is what scammers will say to convince you to do stupid things with your money (like buying pumped stocks) and what both hucksters and even non-fraudulent trading gurus will say to try to get their hands on your money.

The simple truth of the matter is that everyone has different goals and priorities. The most important thing you can do is to make sure you are aware of how the priorities of those you deal with and listen to differ from your own. A stock promoter’s goal is simply to get you to buy stock — damn you and your kid’s college fund.  A trading guru who sells his services with an alert service or trading chatroom benefits the longer you subscribe. His financial interest is best served by selling something that you will continue to want or need for years and years. The guru’s monetary motivation will — ceteris paribus of course — cause him to charge as much as he can for as little as he can. He will sell you hard to get you to pay him more money.

Even saying that all traders care about is profits is wrong. Especially in the penny stock world there are many of us who are motivated by other things besides profits (of course we are all motivated to a large extent by profits). I remember getting a bunch of flak from commenters on this blog when I accused a certain pumper of violating securities laws (six months later the SEC sued him). People attacked me for potentially destroying profitable trading opportunities. But I along with most other bloggers don’t just do this for money.

At the end of the day, each of us is motivated by different things, some of which are obvious, some of which are not. Money is the most obvious, but most of have emotional motivations — we genuinely want to help those we come across. Some of us have other motives that drive us, more powerful motives. When the time comes, my motivations will be made clear. In the meantime, let us embrace the motto “All for one, one for all, and every man for himself!”

 

Disclaimer: No positions in any stocks 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..

Do you even know what you don’t know about AMCORE Financial?

One trade today, a short of AMFI … I would’ve played it bigger and held on longer but I am just finishing up my SEC Filing DVD. You probably only have a few days to a week left to order it at special pre-order pricing.

For more information on Canopy Financial and Jeremy Blackburn, check out this SEC litigation release.

Daily profit: $102.00

Disclosure: No positions in anything mentioned in this post. My health savings account is a creditor of Canopy Financial and potentially of AMCORE Financial and Shawnee Administrative Services. This blog has a terms of use and you can find all my disclaimers there as well; my full terms of use is incorporated by reference into this post.

Trade recap for December 16th: Failing utterly on SNSS

I have updated my disclosures and disclaimers, which is now upgraded to a terms of use. Please read it: http://www.reapertrades.com/terms-of-use/

I suggest reading the amusing exchange between Tim Sykes and The Lionmaster about EONC today. Here are Lionmaster’s first comment and Sykes’ first reply.

+    BOT    3,000    SNSS    false    Stock    1.850    USD    DRCTEDGE    08:09:08        15.00
+    BOT    3,000    SNSS    false    Stock    1.670    USD    ARCA    09:38:29        15.00
+    SLD    10,000    EONC    false    Stock    3.179    USD    SMART    11:36:09        50.00
+    BOT    10,000    EONC    false    Stock    3.130    USD    DRCTEDGE    11:37:42        50.00

Daily profit: $22.00

Disclosure: No positions in anything mentioned in this post. This blog has a terms of use and you can find all my disclaimers there as well; my full terms of use is incorporated by reference into this post.

The seven rules of trading

I post this today as a reminder to anyone who is caught short in the big NLST short-squeeze.

Sometimes I’m asked why I don’t make more money. I have two responses to this: first, I am not actually a very talented trader; second, I trade for a living, so my goal is to make a certain income while taking as little risk as possible. Those who focus on making as much money as possible while ignoring risk will invariably lose almost everything, no matter how talented they are, just as Livermore and Niederhoffer did.

1. Hope is not a strategy.
2. Plan your entry and exit before you make a trade.
3. If you are unsure of what to do, get out.
4. Only trade when you have an edge.
5. Track all your trades. If a strategy loses money, abandon it.
6. Do not focus only on potential gains but also on potential losses. Trade only when the risk/reward ratio is favorable.
7. Don’t let a very good profit disappear or turn into a loss because you want an even bigger profit.