Wow what a morning. $MRNA popped up on a news catalyst that informed us great unwashed that they would be partnering with Merck to develop a cancer vaccine. Yeah, pretty good news.
The stock gapped up in the premarket to $135 from $118. Helluva gap I would say. I would also say that keeping that kind of level would be hard so I decided to go short 100 shares. At the open, it popped up to $141 before slowing dropping back down into the low $130’s. I had to wait 45 minutes for it to come back down after selling 35 more shares as it went up making my average price 134.33. I got out at 132.30 for a two dollar profit on 135 shares ($270).
I KNEW it would come back down as that size of gap isn’t something that can usually be maintained all day. Folks want to take profits and more selling than buying will cause a stock price to go down. I include a screen shot below of the trade.
It should be noted that I, again, didn’t stick with my stop loss. I should have been out around $135.33 with a $100 loss but my convictions kept me from covering my short. It should also be noted that I used ALL my margin so couldn’t short any further on the way up.
Now, my largest criticism in myself is not that I ignored my stop, it’s that I ignored my stop AND missed out on an almost 6$ move up from the open. Had I read the chart correctly and inferred group psychology, I should have KNOWN that people would want to get in on this action at the open and drive the price up.
That first candle at 0930 opened at $135.56, closed at 135.58 and would have been a good candidate for an IMMEDIATE entry at 0935 when the second candle opened. It went up and up and up and I missed it. That would have been the safer trade as well with the 5M Opening Range Breakup setup being one I’ve been using since September.
I need to start reading the opening range better and trying to hold off trading until 5 minutes after the open. This is a discipline problem and I have to make a decision about how important it is. I HAVE been burned in the past by deciding to hold a short longer than I perhaps should have when a stock was in a serious uptrend and I took a loss of $400.
Trading is easy. /sarcasm