The adventure of trading GME
By now, everyone knows about the pranks that happened to GME and a few other stocks. I think I will record some of my profits from the parabolic rise (and subsequent decline).As you may know, I created a Parabolic Rising Stock Scan Find such a situation.
GME first appeared in the scan on January 13 it is still Since then it has risen by more than 500%! Sadly, I cannot say that I bought it at the time. Long time parabolic motion is not suitable for me—— I actually wrote a scan to find short candidates.
This is the chart showing the day:
I have to scroll from the page for the last few days so that you can see the intensity of the movement. It looks like nothing on the current chart:
This is a chart of Bollinger Bands. Flying over the upper Bollinger Band so far makes me feel much better about the imminent opportunity of mean reversion:
Here are a few reasons why I usually dislike long stocks that have become parabolic:
- The risk of them being stopped, Especially those who rise for no reason.
- I like to buy nearby support so I can Define my risk And the stop loss level.
- I prefer to buy callbacksI would also consider buying breakouts above the trend line, flat/straight line resistance or moving average. But my mind/personality does not buy anything after it surpasses the upper Bollinger band. I usually feel that at that time I was a fool sold by people who bought much lower.
I usually see if I can figure out why a parabolic movement occurred, and then, if I think it is a false movement, I look for a point to short it.Over the years, after falling into some brief squeeze I learned some lessons Regarding the pursuit of such porters:
- They can rise much higher than I thought. So be patient.
- Check the borrowing costs of my broker. Usually the cost is 80% or moreIf you end up holding the position for a few days, it will make it very difficult to make a profit.
- Taking the average may be a good idea
- Sometimes extending the trading time will give you a good entry point.
- There may be some things that I can’t remember for a while.
On the 13th, I added GME to my “potentially short” watch list, and I have been following it ever since. It formed a huge (bearish) meteor-like candlestick on the 25th. This really caught my attention, but then I also started to hear about how the Reddit / WallSttreetBets mob tried to force some hedge funds to exit their GME short positions. I also follow Citron, one of the main targets on Twitter, and I see them screaming bloody murder. 🙂
When GME almost denied the meteor the next day, I knew things would get very interesting. Then the next morning (yesterday) I saw it was Rise by about 100% in pre-market trading Thanks in part to Elon Musk for posting it on Twitter.right now I am mouth watering Short! Then I saw that GME’s short-squeeze was mentioned in a mobile program in the mainstream media. This makes me think: “Well, we are nearing the end”. This is my tweet yesterday morning:
and so $GME Crazy has been on the morning show of the mainstream media. This *must* be the end of the party-right? ? ? 🤔🤷🏾♂️ It feels like an old Barron or Sports Illustrated magazine cover curse. pic.twitter.com/893GkQgzVw
— Michael Senedza (@TraderMike) January 27, 2021
I’m still a bit cautious about shorting GME because I know this story is spreading,”They can rise much higher than I thought“Appears in my mind. So I think”Is there any other way Can I short GME effectively? “Let me check ETF holding GME stock. So I went GME page And click the “ETFs Holding GME” button.
of Among the ETFs listed there, XRT stands out Because the chart clearly shows that GME has a great influence on it.It is much higher than its Upper Bollinger Band, so I think I can use upper band retracement as the first goal. I also like the liquidity of XRT and other GME-exposed ETFs. In the end, XRT has enough volatility to make it worth trading, but not enough to make me worry about being slaughtered if I hold it overnight.
So at 9:41 I decided to short sell 200 shares of XRT at 87.80. GME’s Story *Really* The tour was carried out during the day. I started to get questions about it from friends who don’t pay attention to the market or even overseas people. This actually makes me more confident that we are nearing the end. At the same time, XRT fluctuated throughout the day and closed at 91.49. I am a little frustrated, but I am not very worried.
So I woke up just after 6:00 this morning and saw that GME had already exceeded US$500, but it soon fell back to a low of US$400. I thought “Damn it, I really want to sell GME to around $500”. After a while, it started to rebound and I decided to open a small short position. “Small” means small enough, so if they sell it for $1,000, I won’t curl up in a ball and cry. :-). I was able to short 10 shares at a price of $458 7:53.
Soon after I started to see headlines about Robinhood and Interactive Brokers restricting GME trading to “clearing only”-I don’t remember seeing this in my 25 years of trading.
Before my broker, Interactive Brokers, stopped allowing new GME positions, I was lucky and completed a short trade. IB also increased GME’s borrowing costs to 300%, So I know I will not hold this position overnight! Now I think I just need to sit and wait for the bottom to fall off. easy to say, hard to do. The GME transaction is like a tenacious mustang. It will fall like a rock, stop, and once it recovers, it will rebound violently, stop, fall, chop, stop….
GME must have been stopped 20 times today! This is another reason why I don’t like trading parabolic movers-I know they may be suspended, and I usually don’t want trading to be suspended. Sometimes they even suspend inventory for days or weeks.
Once GME really started to fall, I tried to cover my short position, but without success. After it broke through 200, it was cascading down, but it stopped until my order was completed. It slid to 112, but I still couldn’t fill it up.Thank goodness I decided to cover XRT at that time and be able to buy back these stocks at 78.54. Finally I Purchased GME for $247 At 11:45, 46% of the profit was obtained. 4 hours of work is not bad.