Pennies on the Dollar

Another day, another $100 or so. Actually, it's been one month, but I made another decent trade. Not quite 5%, but it's positive, so I'll take it. Here are the details:

On Aug 10, my "Superhero" Screen pointed me to a company called Synaptics as being undervalued. I did a little reading and realized they had taken a healthy beating after not quite beating Wall Street's earnings expectations - but still making good money. I bought 1400 shares at 26.85 and set a sell limit order for $30 and walked away. Today, while checking some stocks, I saw SYNA had made it's way up to 28.44, but had fallen back to $28.25 or so. I *tried* to sell at 28.25 and lock in 5%, but the order never went through... which is another lesson for another day (Level 2!) I kept lowering my limit and the price kept falling. For a couple reasons (one stock related, and one not stock related) I decided to go ahead and execute a market sell order (bad juju) and got out of the stock at $28.08.

Here's the math:
1-(26.85/28.08) = .0438 or 4.38% gross profit margin

HOWEVER... we have to include our transaction costs (which are what kill most small trades) to get our net realization. I'm trading on Scottrade, so it's $7 to buy and $7 to sell, for a total of $14. Spread over 100 shares, that's an additional cost of 14 cents per share, so...
1 - ((26.85 + 0.14)/28.08) = .0388 OR 3.88% net profit margin (pre-tax... which is also another lesson for another day... tax day.)

How many positive trades make a trend? I need a trend of positive.

So, it seems I've picked up on screening a little, which is good.

BUY THE RUMOR SELL THE NEWS
OK, so I have no focus and concentration whatsoever and I've been watching some penny stocks, some penny stock traders, and the trading world a bit in general. I've learned are a couple of things that I intend to implement:

1. Volume makes money. This is true for big stocks and little stocks. One of the things I've noticed is that I've been moving slowly because I've been playing with low volume / slow moving stocks. Which is fine, as long as I keep going forward, but they don't feed the need for action... (what? i thought this was about making money!! it is, but it doesn't hurt to learn a little faster...) Anyway, more volume means more movement in the stock. Hope you're on the right side of the movement (unlike how this thing started in December.)

2. Stocks move on rumor and news. There are people who sit around and watch charts and news (I'm learning to). If the chart lines up, and some news comes out, the game is on... and it's definitely a game. Sometimes the news is rehashing of old news, but it generates buzz and volume - even if for a day. Sometimes this is legit, sometimes it's...

3. Pump and dump. You've heard it. You may understand it. I won't go into an explanation here, because I can't do it justice, but once you understand it, you'll be able to spot it if you're trying (I've noticed.) You can make money while others are pumping and dumping if you don't get too greedy. I'm going to give it a shot over the next few weeks months. I think I'm less greedy than others, so we'll see how it works out for me. "Greed is good".

More on pumping and dumping... I've joined a few stock trading forums where there are plenty of people analyzing stock charts, news, etc. One of them does a pretty good job of putting out an alert that is probably a borderline pump. They tend to give official news (and I wonder how they get it - something else for me to learn) but also puts some technical analysis with it, so it's legit for them, but whoever is accumulating the alerts is ahead of everyone else on the site (which is fair). They've nailed some pretty good calls, but I don't know if I'd be able to move fast enough on one of their alerts (which happen when the market opens and the stock is usually on the way up already). I've tracked them for a couple of weeks and the alerts that I've felt comfortable with have been winners (they also point out some stocks to watch that i think are losers - maybe they're good for shorting.)

I'm going to give one of these alerts a shot next week. We'll see. I did pick up about $170 worth of a penny stock that someone alerted on... of course, it fell after i picked it up, because I picked it up far too late. Lesson learned. I'm still holding the stock. For now, it's down about 45% from when I bought it and 100% from the high on the day I bough it. It'll move again and I'll get out then. Nothing major if I don't sell it... and nothing major if I lose $170 total to learn a little about penny stocks and the related trading(I won't lose it all.)

Oh, I almost forgot to give the "overall" numbers...

As of today, the account is worth $2,920. I've put in $3500, so I'm still down 16.6%, but I'm going to HOPE for CHANGE... (actually, I'm going to WORK for GAIN. Hope and change are for politicians.)