Compounding Is The Eighth Wonder of The World


Thank you for taking the time to read my blog post. I am a sophomore undergraduate student at Ithaca College majoring in business administration and a marketing intern for Essex Trading Apparel! I am looking forward to sharing my investing journey with more blog posts in the future! I hope new investors can apply and analyze the lessons and experiences I have come across to make better investing decisions.


The start of the new year has been hectic and exciting for many new investors and traders. Some young investors made lots of money, yet the majority went home with their pockets half full. January was a terrible time to build a base of learning on investing and trading in the wake of the “meme stock” frenzy. The past couple of weeks has shown how inefficient the market can be. This is a poor time to learn about investing and trading as it does not replicate the normal patterns of the market and has many young and new investors thinking this type of behavior is more normal than it is.

Unfortunately many of my peers, like many other young new investors of the past few months, bought GameStop or AMC on their new zero commission Robinhood accounts. These are the same twenty year olds asking me questions several times a week on what stock looks good, what a short is, what a stop is, and more. I did not touch GameStop or AMC once during the market hysteria. I advised my friends to do the same. There was no fundamental or technical analysis driving the stock price volatility. This made it an incredibly high risk gamble.



My 2021 investing and trading career was more cautious and has been off to a good start. What has been more valuable than the little money I have made is the lessons I continue to learn from my mistakes. Details are important. Do all your work thoroughly because sometimes there is only one opportunity to get it right. A way in which I trade is through the heavy use of stop loss orders. Now I have to be careful as the SEC only allows 5 day trades a week if you have less than $25,000 in your brokerage account. When I buy a stock with the hope I am about to get that one opportunity, I always set a stop. I set a very close stop to where I buy it. Sometimes too close. If you set the stop too close to the current price, you aren't letting the trend breath. However, you want it close enough to the current price so you don't lose too much money if the stock decides to fold.

Many investors use the recent support levels and place their stock there. I usually just look at the charts and decide a good spot to set it, usually around 5% lower than where it is. This is the reason I usually have a 1:2 win-lose ratio and still make money. I win big and lose small. Losses in stocks can be cancelled out by gains in others. This is why I am comfortable trading in speculative and growth stocks. These types of stocks may have more risk, but they have untapped potential with faster growth. You control this risk with setting smart stop loss orders, doing your research, and implementing basic technical analysis principles.

Run Down Of 2021 So Far

Wins

BYND - Win

Buy: $120 Sold: $188 Return: $68.00

TLRY - Win

Buy: $19.2 Sold: $25.4 Return: $49.60

WKHS - Win

Buy: $36.8 Sold: $39.8 Return: $9.00

SOLO - Win

Buy: $7.8 Sold: $9.15 Return: $27


Losses

PLUG - Loss

Buy: $66 Sold: $63 Return: -$12.00

SOL - Loss

Buy: $27.7 Sold: $26.5 Return: -$10.80

TLRY - Loss

Buy: $19.2 Sold: $18.2 Return: -$7

MUX - Loss

Buy: 1.240 Sold: $1.2 Return: -$3.20

Current Portfolio (As of 2/14)

NIO

Bought: $59.6 Current price: $62.8 Unrealized total gain: $9.72

PLTR

Bought: $33.65 Current price: $38.17 Unrealized total gain: $22.6

PLUG

Bought: $68.3 Current price: $67.48 Unrealized total gain: -$2.46


NIU

Bought: $45.34 Current Price: $43.90

Unrealized gain: -$7.23

FSR


Bought: $14.85 Current Price: $19.46


Unrealized gain: $27.66



I have no stop loss orders on NIO, PLTR, PLUG, or NIU. I am confident in these securities' long term growth. If I was able to have more than three day trades a week, I would definitely have stops on all of them.


On January 27th I bought PLUG after it had dropped in after hours from $73 to $68. It went down $2 more dollars to $66, where I bought it, thinking it was a quick and easy swing trade that would be at the $70 range soon. I set a stop at $63 and on February 2 it went below. However, two days later it went to $70 again. What I have learned is that with my limited day trading abilities, I should not set my stops so close, as I can lose out on powerful rebounds, seen with PLUG shooting from $61 to $70 in two days right after it went below my stop loss order.


Lessons learned:

  • Do not set a stop loss order too close to where you buy the stock.

  • Do not try and get in right before you think it will reverse, if it is still bearish.

  • Do not always trust in “buying the dip.”

Safe trading,


~ Keegan Santasiere

Essex's Trading Quote of the Day (QotD)


"It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong."


~ George Soros



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