Analyzing a recent trade: Greed got the best of me

I guess I got too greedy.

No, I DID get too greedy!

Take a look at the screenshot below from my public Google doc listing of my trades:

You see that Altimmune (ticker: ALT) row trade that I highlighted?

Entry at $4.85, exit at $4.90.  Pretty much a non-event, right?

But behind that is a HUGE missed opportunity. 

I got way too greedy, and missed selling at a MUCH higher price.

I bet you also probably see that previous trade, a huge gainer with Level Brands?  That sticks out!  Normally that doesn’t happen.  That trade worked out way better than I expected (look at my anticipated, gain).  I think that actually came into play on ALT…we’ll get to that.

So getting back to Altimmune, what the heck happened and why am I writing about it?

It started out like an ordinary swing trade for me.  ALT came up on one of my screens as potential swing trade candidate.  It looked good, had a lot of what I look for.  Here is the chart:

This what I call my “Tall white candle” pattern screen.

Same trading concept as most of my other screens:  buying on a retracement of a previous large move up, but unlike most of my other screens which has a previous move that can take days/weeks, this is just a large move up, a “tall white candle”.

You can see the huge move up, the ugly decline that retraces to near the initial breakout point, and then a ray of sunlight….an up day.  You see how I circled that day, which occurred on 10/1…a sign that the bleeding has stopped.

I anticipate a bounce, so I enter on 10/2…$4.85.  Nothing much happens…I patiently wait for the bounce when people see that the price has stabilized, the good news that caused the big white candle is still out there…so maybe we it’s a good time to get in.

Then things started to happen.  Check out the next chart:

You can see out of nowhere, the volume started to come in and the price just jumped!

This is a 15 minute chart.  You can see that 10 and 11 at the bottom of the chart?  That’s 10AM ET, then 11 AM ET.

I couldn’t see any reason for the jump.  No news had come out.

Then I saw this:

This is a biotech drug company and apparently their nasal flu vaccine had a very positive response so far in the study that was being conducted for FDA approval.  Look at the time…3:42 PM.

So here is the rest of that 15 minute chart, and as you can see, it’s a thing of beauty, with a huge move higher, closing in at over $7/share!

I held onto the stock and didn’t sell one share.

So the stock closed nicely higher, as you can see on this little 15 minute chart.  I felt pretty confident that the next day was going to be a good one!

So here is where my greed started to kick in!  Here is where I started to look at the previous trade, where I had a huge, 80+% profit.  I was hot.  I made a killing on the trade.  This one was going to be exactly the same…maybe even better!

I made a decision to hold.  I had bought this at $4.85.  With this news, who knows, maybe it could be $10, $15…$25?

That previous trade in Level Brands had made me greedy.  It also gave me a feeling that I was so smart and so hot.

“Two trades in a row with huge gains like this?  Awesome!”

I could have sold in the after-hours market on the day of the big move, where trades were going off between $7 and $9/share.

I could have sold the next trading day in the pre-market too.

In the pre-market the next trading day…at some points, the stock was up towards $9 a share.

Then $10 a share!

Then I started to think that maybe I should just cash out in the pre-market.  Who was I kidding?  This trade could produce over a 100% gain!

I came close to doing just that, but then decided not too.  I was greedy.

So what happened next?

Well, still during the pre-market trading on the day of 10/8, this happened:

For a stock that had a low float, and a small number of outstanding share, this amounted to maybe a doubling of the number of shares:

As soon as I saw that, I knew I was toast.

The pre-market rise stopped and plummeted.

I went from visions of huge profits, to potentially staring at a loss!  It was amazing to witness and feel.

I could have sold near the close the day before at over $7 a share.

I could have sold in the pre-market for $8/share, $9/share, $10/share.

But I got greedy.  I lost track of what I was here to do: follow my system, go with the odds of expected profit, but I got wrapped up in the emotion, I let the greed take over me.

I noticed just now, something that I failed to recognize before.  Do you see my “Anticipated Gain” for both Level Brands and Altimmune?  For Level Brands, it was good, but a relatively modest expected gain.  Then after that huge gain that exceeded my expectations…look at what I entered for my anticipated gain for Altimmune…$9/share?!

I enter the gain/loss expectations before I enter every trade.  This helps me look at the risk/reward for each trade and my system overall.  I also use it to determine where I should put my stop-loss.

You can see right there how cocky I was.  Stupid.

In any case, like a beaten dog, I sold at $4.90, pretty much getting out even.  I was actually lucky, I could have had a loss on the trade.

After the roller coaster of a 2 days with Altimmune, I checked out the Twitter feed on Stocktwits and then saw this:

This was ironic to see.

I follow this guy on Twitter.

I am a regular reader of his website.

As a matter of fact, I listed his site on one of my blog posts where I listed some of my favorite trading-related sites!

There he was…calling it like it was.  He got out.  He didn’t get greedy.

Maybe there are times that he does (I haven’t seen it), but I know that I did.

I should have taken my gains, remembered what I was here to do, and taken my profits because those types of gains are not typical.  Instead, I got wrapped up in emotion and let my greed take over.

It hurts.

But you know what?  We can’t beat ourselves up for making mistakes and letting greed and fear sometimes get the best of us.  We are only human.  What we can do is just keep plugging along, learn from our mistakes and then try not to do it again.

Can I guarantee that I won’t do this same thing again?  Hopefully not, but you never know.

At least I have this experience to look back and remember.  Writing this blog post now, I can see that my emotions were getting the best of me even before I entered the Altimmune trade…even before this huge move occurred a week later: by putting in that unrealistic and huge “Anticipated Gain” number.

Have you had a similar experience?  If so, leave a comment below.

Until next time….don’t get too greedy!

-Glenn (the Greedy Goblin)

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