Today was not a good day as far as results go. I hit my downside fairly quickly. Process-wise it wasn't horrible. Some tweaks will have to be made for sure. In general, giving things more room and sizing down if need be - I no longer ever want to be stopped out if I end up being right in a trade (within reason). I also will no longer be using level 2 at all unless it is blatant. No trade shall be put on with the reason being solely from level 2 information. It has gotten me in trouble more than once and it is definitely a pattern where most of the time it is bullshit.
CNAT: I saw in premkt that the offers were absorbing and it was stuffing near the 5.25 level. I thought it was weak and given the news I thought it could fade. Plus it has a history of fading on days like today based on the daily chart. I didn't get it right at the open but when it got to vwap I thought it would be a good attempt and I would add higher if need be at 5.30ish so I did do smaller size here since my risk was so high. As I switched to the 3min vs. the 2min I was using though, it definitely didn't look as good but I decided to stick with it and not take the tiny loss once I realized that because I figured it would eventually fade. This was a mistake as I should have just gotten out and then reassessed. Anyway, when it got to 5.30s and it stuffed on big volume I added in. However, I didn't give it enough room past that it seems. I saw it spray to 5.43 so I put my stop at 5.45 thinking that if it got past there then it would definitely go higher. It stopped me out at what ended up being the top and then faded back down. I thought about shorting after it dumped but wanted it to pop a bit more than it did but it just stayed near the lows and then dropped. I also thought about a breakdown trade but I didn't want to bother with that in case it just wicked through. I wasn't going to chase it even though it ended up working - I've had enough of that. Lessons: The level 2 from premkt and the stuffs made you overly bearish without thinking about what it can do. Realize (and I knew this when I was trading it) that what happens in premkt or at the open may not be indicative of how it plays out afterwards. Also if you don't like a trade right after getting in then just get out. Also you have to give things over/under room just in case. So $5.30s over/under is a good point. It went to 5.50 which makes it tough but it never broke it.
ACAD: With the big fade from the premarket highs I thought this could just continue at the open. I saw an offer walking it down with it absorbing at each new level. So when it opened I saw $29 was absorbing so I tried to get in there with the idea that $29 can hold and it would have a straight fade but that wasn't the case and it broke through it. I tried it again later at a different spot but it didn't work either so then I gave up. Had I ignored the level 2 and just stuck to shorting it at vwap that would have worked out perfect. So the lesson here is to not use the level 2 for absorbs unless it is repeated.
AKBA: I just kept it on watch because it seemed like the type that could fade. It did fade straight from the open but then I noticed a large vwap stuff so I shorted there with risk to it on vwap. I did extra size and when it started going above vwap a bit I just went back to regular size although I do not like this technique so I won't be doing it in the future especially since it's not really scalable when you get into bigger sizes. The mistake was to not see that 10.25ish was a level from premkt and that should be the over/under instead of just vwap to give it more room. I gave it some room to hold vwap and then it flushed which I thought looked good but then it came right back above vwap and I moved my stop down and I just got out since at that point I had a feeling if it got back above vwap it could go higher. It never did anything else for the rest of the day for the most part although it did tick higher before coming off again. I don't think there is a lesson here as honestly this was the only trade I didn't really mind how it ended up and the process behind it.
Things to remember:
1. Don't use level 2.
2. What happens at premkt and the open doesn't indicate how it will trade afterwards in most scenarios.
3. Use less size to give things over/under room.
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