The SmitDog $10K Eulogy:
How does one begin to write a eulogy for a challenge that will be ongoing…whether ‘published and out in the open’ or continuing as a personal challenge? In that this ‘first attempt’ was there out in the open, we know what the outcome has been...basically a wash...except for my brokerage firm that has made money on my commissions. Keep track of such things. You’d be surprised how much you give your broker over the course of the year. Geeesh is all I can say about that.
Now, I’ve been trading these pinky/sub-penny/OTC Plays for about a year now...my first lessons have been ‘very expensive ones’. This was far from that, but I feel it illustrates quite well, some ‘rules of the road’ when trading this far down the ladder. Hopefully folks will learn from the experience that I put out there in the open for everyone to see:
Insight #1: Fight the impulse to use up your funds. If you do, when that ‘gotta have momo-play’ is sitting there in front of you, there will be no funds to buy unless you sell something that might not be ready for a sale. Too much went into USFM upfront, leaving me without 25% of my initial investment to this day.
Insight #2: Make sure what ‘looks like’ a ‘material event’ actually is one. Again USFM is a good example. They released a PR in the PM on a Friday (sometime in early July) hinting at a ‘new course’ for their company. An RM was what a few of us following that one thought might have been in the cards since their last run. No PR’s since...nothing ‘material’ delivered....thus dead money.
Insight #3: Though there are exceptions (BCCI, JCOF, BRGO, SMKY, OPMG and YIPI to name a few), for the most part, I-Hubbers do not like plays already trading in the ‘multi-pennies’, no matter how promising the play would seem- ala PUBM…another 25% of my available funds committed there. Couple that with the paucity of trading volume that typically comes with the summertime and what you have is ‘dead money’…especially if you don’t have the ‘ingredient’ of lesson #4.
Insight #4: Awareness is a critical factor in any play. I’m not a ‘natural pumper’. I will pump a play I’m in if I see it moving, but don’t like to pump in an effort to get something moving. I’m also more than willing to assist my good friends with some of their pumps, but just because I like a play doesn’t mean it will move….evidence : SPKL, IDCX. So, for that $10K challenge pick, signs of pre-momo emerging is critical.
Insight #5: Allocation means everything. Had I gone ‘all in’ with MMTC- the $10K challenge would have been met in short order. Instead, 1/2 my portfolio funds was committed to 2 non-moving plays, while a couple small, but early losses nibbled away at the remaining funds. Does this sound familiar my fellow traders? SIRG would also have left me with a pretty penny in returns had I thrown more than $200 at that one. The only problem to keep in mind here is that big bets can also mean big losses, so gotta stay on top of those trading tools and rules to make those big bets work for you.
Insight #6: Again, though there are exceptions, don’t talk yourself into believing plays with good momo will continue to have good momo. In fact, the best runners often end up down a few days to weeks after a good run. Evidence- several of my picks that have produced at least a double following my grabs trended down soon after:
USFM hit .015. Fell as far down as .005 there-after
IDCX hit .089. Currently trading at .04
MMTC hit .0198. Pulled back as far as .0043 after
SIRG hit .0178. Pulled back to .0055 after
WRGL hit .04. Pulled back to .025 after
SUGO hit .025. Pulled back to .006 after
Point made yet? This doesn’t mean all those plays are dead, but one’s gotta trade accordingly and know when to take a profit as well as re-enter in those that hold promise.
So, my insights from this challenge: we need volume, awareness (and awareness makers), a good SS, signs of life and for pps to be nicely below a penny. With these in place, we also have to don on our ‘traders’ hat and put the ‘investor’ one on the coat rack in order to make $10K from $2K in 8 weeks.
Now, where does that leave the Smit Dog and his $10K challenge? It's continuing! It will be called The SmitDog $10K Challenge Redux. The changes? There are 6:
1. Unless there's a 'table-pounder' with a low SS that's already got some momentum, it'll be all sub-pennies baby!
2. Flips and scalp trades will not be excluded in my 'redux picks'. The previous challenge left me holding plays that should have / could have been profitable flips, but being aware I previously said flips and scalp trades would not be part of that portfolio, I was committed to my prior statements. Redux- let me be freed from those binding shackles!
4. Increasing my ‘monetary commitments’ from a $200 minimum investment to $400...largely because those commissions will kill a fella with small bets that yield small gains. The other consideration is that the gains come too slowly with such small bets.
5. I won’t ‘bind myself’ with a time-frame. Though I do think 8 weeks is a reasonable enough time to meet the challenge, I don’t want to continue putting that kind of pressure on my trading decisions. If it’s 8, great, if it’s 4 weeks- then wonderful, if it’s 12, then so be it. Once achieved, you'll know and I'll celebrate
6. My picks wont be considered part of a portfolio as that term will be somewhat 'misleading'. The trade can occur in a day or two whereas 'portfolio' implies a longer stay IMO. I'm not suggesting the plays will be 'flips', but only that they could be depending on the play / situation. I'll simply be throwing them out on the board as plays I take a position in that I think has the 'ingredients' to provide a decent return. They'll still be called $10K challenge pick.
Simple modifications, but ones I think will help going forward.
