Hey guys I am after some constructive critism regarding my trade with VGH.
I have posted this thead really late, as there is a strong chance that i will sell all my shares in this stock tomorrow wed, 17/03. If I do sell constructive critism regarding my entry strategy will be appreciated.
This stock has been in a sharp decline since nov/dec, has fallen 50%.
From the start of december to the end of feburary this stock traded with low volumes in a downtrend. From the middle of feb to recently the stock has been trading in high volumes ( by high volume i mean days which volume is in the largest 20% of volumes traded daily for the last year) with a sharp declining price. This appeared to be a firm dumping its holdings. on monday 15/03 the stock price took a jump of 3% at the start of the and proceeded to fall on high volume and spent the last couple hrs of the day on 0.83% above fridays close. Which is what I decided as a good price to buy, at 61c.
Why did I buy the stock. Last couple of weeks it looked to me as shares were being dumped. Then we have a high volume day and an increase in the share price, which indicated the firm/s had stopped dumping and demand was growing.
Often i see stocks in down trend, become cheap and suddenly jump as a big parcel is bought, thats what i thought started monday. i am trying to get on that sudden jump here.
stop loss, no actual stop loss set. but if the share price falls 3% from my purchase price i will reconsider the need to own the shares. if it falls 5%, i am wrong-sell at market quick. SET IN STONE. time stop of 3 days.
For this trade i am betting that the stock has been oversold, underpriced and the market will quickly realise this. Seems like a bold bet, gulp. if i am wrong and the share dumper was right and the down trend continues then i sell at a loss of 3%-7%. Most probably closer to 3% as it can be quickly verified in a day or two if entry reason is wrong.
If i am right i could win up to 25%, strongly consider selling at 10% up though (see how it looks if i get there), if i am wrong prob lose 4.5%ish.
so geting like 2:1 or better, so if i am right >35% (brokerage) i am a winner, seems bold once i have written it, hmmmmm
Today the share price opened at 61.5c and proceeded to fall to 59.5c, 2.5% down from mondays close. stock traded at a high volume. This concerns me as there does not appear to be the demand i was betting on. I plan to sell tomorrow and cut my losses if there is any indication that demand is not strong.
Today, after market close, there was an anouncement saying a firm had been dumping shares for the last couple of weeks and had disposed of the last on monday,15/03.
That being the day which i thought the dumping had stopped as the share price had risen. Bad sign- reason for entering was incorrect. But the demand could still be there, why did it go up.
If the share price falls on wed 17/03 i am out, my reason for entering the trade was wrong.
So why did the share price rise on monday?
It had 4 days in the black in the past 5 weeks.
40% of the shares dumped over the last 2 weeks were dumped on this day.