Trading with Focus: Looking for the next 1500pc ASX trade?
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Etherstack (ASX:ESK), dorsaVi (ASX:DVL), Alterity (ASX:ATH). Each pulled from years of relative obscurity by a rush of eager new day-traders, many of whom are unfamiliar with the vagaries of the market — and the sharks that circle.
Most end in tears for those that arrive late and chase the rally, and most don’t get out in time, leaving their recently drawn-down super monies behind.
These aren’t the sort of rockets that land safely!
These stocks all had something in common. They were quite small and unloved. You can download a list of companies and their market caps from the internet, and work your way through the smallest ones to add to your expanding list of ‘possibles’. But that would be admitting that you are a degenerate gambler.
Then you have a look at the sector they are in. Is it the sort of sector that would confuse a lot of new traders? Tick. Does the announcement make you think that it could be really good, if you read it a certain way (Tick!), and does it leave the door open for uncapped speculative potential (tick tick tick … BOOOOOM!!!).
The only way you should take off in these sort of rocket ships is to HOPE that there is someone who will pay more for your shares than what you paid for them – AND later that day, not years later after building a boring business and making stupid profits.
A few months ago a little company called Jupiter Energy (ASX:JPR) went through the similar run, but they didn’t even have an announcement to start the ball rolling!
A picture tells a thousand words, so we’ve pulled a chart off the new Marketech Focus app ($45 a month, with $5 or 0.02 per cent brokerage).
And we don’t see a lot of hope if these patterns repeat, because it’s unlikely that a hold-and-hope strategy will help the guy that paid 34c for Jupiter. But Jesus did walk on water, and that seems like it would be uncommon too.
One of the handier information sources to be looking at is the market movers section.
Often, announcements categorised as ‘market sensitive’ are released before the market opens, and if the general market is keen on the story it will start to show up after the opening bell.
Notice how in this pic they all have that little exclamation mark next to them? That’s price sensitive news. A lot of (ahem,cough) great companies would have been rushing to get news out in this market, I’m guessing.
As much as it pains me to say, all of those rocket stocks (ESK, DVL, ATH) opened on their lows for the day and rallied much higher from there (before falling sharply lower, of course!).
If you have a look at the intraday one-minute chart, you’ll see how it played out for dorsaVi, peaking in the first 20 minutes of trading.
So you would have had to have found this company among more than 2,000 stocks listed on the ASX. You’d have had to have read the announcement, taken a view on it, and paid around +300 per cent more than the last trade (or 3x the previous day’s close) on the open.
Would you have done any of this? Or would you have let your human nature kick in and waited until FOMO forced your hand, massively over-paying? QUICK IT’S STILL GOING UUUUUPPPPPP!!!!!!
It was FOMO-related-overpaying for 99 per cent of the people on Facebook chat rooms. I didn’t even read the Hotcopper opinions on the matter, but honestly, some of the Facebook chatrooms are making Hotcopper-ites look like intellectually superior beings.
After you’ve finished planning out your ‘Insta-humble-brag with rockets’ you’ll need a screen shot or two to prove it.
Most people won’t get it as they don’t ‘play the market’, but then you’ll have the car with the “doors that go up like this” and theirs will just go “out like this”. Won’t they Richard!
How good’s your app? Here’s a few snaps from ours.
Now as a rocket-man or woman you’ll need to be quick on the trade – how many clicks to place that trade, how easy is it to amend, where’s your cost base?
Or are you scrambling to retype in your details, changing the page on your browser and forgetting how many shares you had as the stock rushes on and on? (I have regular nightmares about that very scenario. That, and fighting cats.)
Marketech Focus is ‘2-click’ to ‘sell-all’ at market, and only marginally slower for any other trade.
Amend your trade on the chart by dragging it to where you want to buy or sell – great for chasing rallies or exiting losers quickly.
Your average cost-base is shown on the chart, AND you can sell directly from the cost base line!
(And look at that brokerage rate, oooo-eee!)
You might go your whole life without being on the right side of a rocket, but following a Facebook chatroom won’t get you there.
You’ll need to know stuff, and have all the info at your fingertips and stay vigilant, and even then, if chasing rockets is your strategy, you’ll be back at the pokies punchin’ coins in no time anyway.
I’ve never been on the right side of a rocket, but I’ve made good bank and bad/fun choices along the way — and kept some of it too! Anyway, I’m too tall to own a Lambo (but I did rent one once coming out of Las Vegas).
So for all the noise and my not-so-subtle tutt-tutting, the truth is probably somewhere between “it’s actually a pretty good announcement” and “you got fleeced by the pros who were waiting for the announcement and they hit it with volume — and then hit the chatrooms looking for suckers”.
So to see in the mainstream media that “this has never been seen before”… I can assure you the sharks have been waiting impatiently since the mining boom ended and they’re hungry.
There’s a lot of fresh meat around that is just learning to swim. So stay out of the murky water unless you is a shark. Is you a shark?
Trade Up to Marketech Focus — a high-function trading platform from $45 per month. Instant trading capability for both PC and mobile to keep you on the move.
As a subscriber you will have access to brokerage starting at $5, and then 0.02 per cent for trades over $25k. Go to www.marketech.com.au to set up a free trial.