Really got smashed on this trade:
Buy HAW @ 1.2 cents
Sold HAW @ 1.0 cents
Loss ~20%
Manage to create this loss in under 2 hours and learnt some more valuable lessons.
Lesson 1: Never trade when your primary trading platform is not working. I spotted this trade just minutes after the company released an announcement to the market relating to some good drilling results on one of their tenements. As news of the release filtered out and was picked up by traders the share price which has placed in pre open for the announcement was swamped with buyers. Some 60 million buyers placed orders and the match price for open started to rise fast. My trading plan was to get in at the open for 1.1 cents and exit at 1.2 minutes later. Unfortunatley my trading platform was having problems so the order had to be created manually and by the time this got done the match price had risen to my target exit price of 1.2 cents.
This is where I should have stopped. I had a strategy planned and altered it in the heat of the moment.
Anyway I decided to place an order at 1.2 cents and the order got filled at the open. I now adjusted my exit price to 1.3 cents and waited.
Lesson 2: Even on a quick trade always do your research. About an hour post open the share price was steadily rising with millions on the buy side and my sell order at 1.3 cents looked like it would be taken out within an hour or so. All good. Then a seller dumped 32 million share at market and pummelled the buy side down to 0.9 cents. The effect was two fold. Firstly it absolutely spooked the market and saw the buy side pull orders and secondly initiated a flood of sell orders at market. Literally in the space of 2 or 3 minutes the ratio of 2:1 on the buy side turned to 1:2 on the sell side. The only salvation was that I acted quickly and got my sell in at 1.0 cents before the close which got taken out before the share found a base at 0.9 cents.
After the my initial exasperation at what just occured, good announcement, massive build up, great volume I decided I would have a look through the company announcements for any information that may shed a light on what just occured. I found what I was looking for. Just a couple of months prior the directors of the company had dumped ~100 million shares on market after a good announcement. Nice one chaps.
It would appear the same had happened again. Basically the directors, by dumping (if it’s confirmed), obliterated any support for the share which has now fallen 10% off the pre announcement price.
Costly lessons to learn.
Happy Trading
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