October 6, 2014

Trade Recap - GPRO

If you haven't heard about GPRO, you've probably been living under a rock lately lol. GPRO has been on a complete tear since its IPO back in June. Here is a daily chart from Sept. 25th:


So this puppy had gone from ~$30 to ~$80--almost a triple in just a few months! I wasn't trying to short this at any point until I saw the parabolic move from $65 to $80--most likely a result of over-zealous/uncompromising shorts.

On the 25th, GPRO had a shake out over/under $80, and I thought I would enter short here after most of the shorts were panicked out, and no sane investor would buy at these levels--or would they? I thought it unlikely.

I shorted a tiny 10 shares in the afternoon at $80.50 after it broke its uptrend line. I told myself to use tiny shares and a wide stop because I "knew" this stock would have to correct/retrace, so I would add in more shares short if it moved higher. I set my stop at an asinine level, $92.10:




Apparently numerous other shorts thought the same thing as me and shorted this momo beast. Well, GPRO gave two shits about what any of us thought, and instead broke-out of the consolidation in the $80s. When it did this, I knew I had made a bad trade--mostly because of a faulty stop out price. I think the trade would have been an all-around good trade if I had chose a tighter stop at, or just after, the breakout of the consolidation. Thankfully, I didn't fight it. I admitted I was wrong and covered into a dip at $88.96 when I got home on the 29th.


Here is GPRO as of Oct. 6th. My cover doesn't look so bad now. :)


GPRO Recap:

Strengths:

  1. Great overextended daily chart
  2. Shorted after uptrend line broke
  3. Shorted a pop, not a drop
  4. Used tiny shares/small risk because I had such a wild stop out price
  5. Recognized the error of my ways, didn't fight the trend and covered

Weaknesses:

  1. Set a completely asinine stop out price, should have selected one near the breakout


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