# A trade with VGH



## akkopower (17 March 2010)

Hey guys I am after some constructive critism regarding my trade with VGH.

I have posted this thead really late, as there is a strong chance that i will sell all my shares in this stock tomorrow wed, 17/03. If I do sell constructive critism regarding my entry strategy will be appreciated.

This stock has been in a sharp decline since nov/dec, has fallen 50%.

From the start of december to the end of feburary this stock traded with low volumes in a downtrend. From the middle of feb to recently the stock has been trading in high volumes ( by high volume i mean days which volume is in the largest 20% of volumes traded daily for the last year) with a sharp declining price. This appeared to be a firm dumping its holdings. on monday 15/03 the stock price took a jump of 3% at the start of the and proceeded to fall on high volume and spent the last couple hrs of the day on 0.83% above fridays close. Which is what I decided as a good price to buy, at 61c. 

Why did I buy the stock. Last couple of weeks it looked to me as shares were being dumped. Then we have a high volume day and an increase in the share price, which indicated the firm/s had stopped dumping and demand was growing. 

Often i see stocks in down trend, become cheap and suddenly jump as a big parcel is bought, thats what i thought started monday.  i am trying to get on that sudden jump here.

stop loss, no actual stop loss set. but if the share price falls 3% from my purchase price i will reconsider the need to own the shares. if it falls 5%, i am wrong-sell at market quick. SET IN STONE. time stop of 3 days. 

For this trade i am betting that the stock has been oversold, underpriced and the market will quickly realise this. Seems like a bold bet, gulp. if i am wrong and the share dumper was right and the down trend continues then i sell at a loss of 3%-7%. Most probably closer to 3% as it can be quickly verified in a day or two if entry reason is wrong.

If i am right i could win up to 25%, strongly consider selling at 10% up though (see how it looks if i get there), if i am wrong prob lose 4.5%ish.

so geting like 2:1 or better, so if i am right >35% (brokerage) i am a winner, seems bold once i have written it, hmmmmm

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Today the share price opened at 61.5c and proceeded to fall to 59.5c, 2.5% down from mondays close. stock traded at a high volume. This concerns me as there does not appear to be the demand i was betting on. I plan to sell tomorrow and cut my losses if there is any indication that demand is not strong.

Today, after market close, there was an anouncement saying a firm had been dumping shares for the last couple of weeks and had disposed of the last on monday,15/03. 

That being the day which i thought the dumping had stopped as the share price had risen. Bad sign- reason for entering was incorrect. But the demand could still be there, why did it go up.

If the share price falls on wed 17/03 i am out, my reason for entering the trade was wrong.

So why did the share price rise on monday?

It had 4 days in the black in the past 5 weeks.

40% of the shares dumped over the last 2 weeks were dumped on this day.


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## newbie trader (17 March 2010)

I've also been watching VGH fall over the past weeks. As to why it rose for one day I am not sure there have been no announcements etc. I was talking with someone today and they said to wait until support comes in. Do you think it will get down to 47c (52 week low)? I thought it may have been a decent buy at 70c with a price target of 1.20 im glad i didnt enter in.

(Above is my opinion only)

N.T


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## akkopower (17 March 2010)

newbie trader said:


> I've also been watching VGH fall over the past weeks. As to why it rose for one day I am not sure there have been no announcements etc. I was talking with someone today and they said to wait until support comes in. Do you think it will get down to 47c (52 week low)? I thought it may have been a decent buy at 70c with a price target of 1.20 im glad i didnt enter in.
> 
> (Above is my opinion only)
> 
> N.T




Im not too sure how far down it could go, i'm out tomorrow unless it is up.


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## Trembling Hand (17 March 2010)

akkopower said:


> That being the day which i thought the dumping had stopped as the share price had risen. Bad sign- reason for entering was incorrect. But the demand could still be there, why did it go up.
> 
> If the share price falls on wed 17/03 i am out, my reason for entering the trade was wrong.
> 
> ...




I don't get it? Its been in a steep decline for 17 days and it moves up for 1 or two and you think thats unusual?

The other thing thats a bit strange is that you were actually right, that its been dumped on by some fund, yet you now want to flip it. And you say your reason for entering the trade was wrong but it seems to be right.

Clearly your stop shouldn't be moved while in the trade but It doesn't seem that you have done anything wrong. Other than thinking that it was going to go straight up 25% after you got in.


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## tech/a (17 March 2010)

Sorry but my view is this is a really crap trade.

There is absolutely no indication technically that this is going to do a great deal.

There maybe in the future but not now.
If your in the trade 57.5 is stop.(should be)
What youd want to see is the price rising on low volume!
OR
Price exhausting on Massive volume.(Spiking lower dramatically and quickly).


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## Boggo (17 March 2010)

akkopower, don't fight the trend, you will lose everytime.

Stocks go down for a reason and get cheaper for a reason, the fact that you think they should go up is not going to reverse anything.

Any stock that is going down is *expensive* now compared to where they will be tomorrow or next week even though they look cheap compared to where they were last week.

(click to enlarge)


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## akkopower (17 March 2010)

Trembling Hand said:


> I don't get it? Its been in a steep decline for 17 days and it moves up for 1 or two and you think thats unusual?
> 
> The other thing thats a bit strange is that you were actually right, that its been dumped on by some fund, yet you now want to flip it. And you say your reason for entering the trade was wrong but it seems to be right.
> 
> Clearly your stop shouldn't be moved while in the trade but It doesn't seem that you have done anything wrong. Other than thinking that it was going to go straight up 25% after you got in.




I think it is unusual, as there is a chance that a new firm may have stepped in and is trying to scoop up the oversold stock. I am not sure if i am wrong abt this yet, i still might be right, may still be strong demand over the next few days then we get a change in/ becoming a sub. holder notice coming in. I doubt ill be brave enough to hold this stock till it gains 25%, if it ever does. but 10% could be done if my bet is good.

One of the reasons that i entered the trade was wrong: monday was the day that the dumping had stopped, it wasnt.

did monday look like a new big player stepping in to u?

why should my stop not be moved? if my bet is wrong i dont need to lose the whole 6%. I can find out earlier, no volume.

Am I wrong to assume that if a big players starts purchasing this stock then its share price will probably move 10%ish?


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## Trembling Hand (17 March 2010)

akkopower said:


> One of the reasons that i entered the trade was wrong: monday was the day that the dumping had stopped, it wasnt.



yet it still went up.



akkopower said:


> why should my stop not be moved? if my bet is wrong i dont need to lose the whole 6%. I can find out earlier, no volume.



I agree, what I was talking about is not moving it down.



akkopower said:


> Am I wrong to assume that if a big players starts purchasing this stock then its share price will probably move 10%ish?




Well mate I don't really like your thinking. But thats just me . There is always just as many on the other side, clearly PPT have been the ones effecting it recently. You can tie yourself up in knots trying to rationalise who causes the next move & why. I guess thats why price action is helpful, its there and its a fact. No need to go deeper than that?


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## nomore4s (17 March 2010)

akkopower said:


> Am I wrong to assume that if a big players starts purchasing this stock then its share price will probably move 10%ish?




The problem is so far it looks like no one is overly interested and if someone is they have no intention of paying higher prices for it.

Why would they bid the price up from here? There looks to be no rush to buy, so why not slowly accumulate at the price they want to pay and let the supply come to them as there appears to be plenty around atm.


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## newbie trader (17 March 2010)

just out of curiosity (more to gauge how confident you were going in/are now) how much of your available trading capital (as a %) did you use in this trade?

N.T


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## akkopower (17 March 2010)

newbie trader said:


> just out of curiosity (more to gauge how confident you were going in/are now) how much of your available trading capital (as a %) did you use in this trade?
> 
> N.T




I am willing to lose 2.5% of my trading acount, getting stoped out when/if the stock loses 6%.


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## newbie trader (17 March 2010)

Sorry i'll rephrase...

if you have for instance 10k and you put 2.5k into a stock then you have used 25% of your trading capital (if that makes sense).

so how much have you assigned to VGH? (if you dont want to answer its fine).

N.T


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## prawn_86 (17 March 2010)

newbie trader said:


> Sorry i'll rephrase...
> 
> if you have for instance 10k and you put 2.5k into a stock then you have used 25% of your trading capital (if that makes sense).
> 
> ...




I dont see how this is relevant. He was willing to lose 2.5% on his trade, so i dont see why anyone would need to know what total % he put in


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## akkopower (17 March 2010)

newbie trader said:


> Sorry i'll rephrase...
> 
> if you have for instance 10k and you put 2.5k into a stock then you have used 25% of your trading capital (if that makes sense).
> 
> ...




figure it out buddy, u got all the info u need.  i will lose 2.5% of my capital if the stock falls 6%, stock falls 100% i lose............42%.

I come from a poker background so i try to manage my stock market gambling bankroll the same way as my poker bankroll.  Harder to judge on stocks though, the price could gap a very long way down.


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## brty (17 March 2010)

Firstly let me say that this is the type of trade I am usually interested in. However this stock does not have the liquidity for me to be a player at all.

Looking for a bounce off the higher volume and off the support at ~60 cents seems a reasonable concept, but 42% of bankroll!!  . Hopefully you only have a small bankroll because moving any more than 10-20,000 shares when you need to, could have large slippage.

Just because PPT has ceased to be a large shareholder, does not mean they have sold all the shares they want to.

brty


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## akkopower (17 March 2010)

Good reply brty makes me look at the trade at another angle.



brty said:


> Looking for a bounce off the higher volume and off the support at ~60 cents seems a reasonable concept, but 42% of bankroll!!




I didnt look at it as i am buying at support, makes sence though. I hope i'm not just seeing what I want to see. how much of yr bankrolll would u typicaly risk on something like this? 



brty said:


> Hopefully you only have a small bankroll because moving any more than 10-20,000 shares when you need to, could have large slippage.




good point I didnt think abt slippage



brty said:


> Just because PPT has ceased to be a large shareholder, does not mean they have sold all the shares they want to.




good point I didn't think abt this. After research I found...
announcement says ppt held 4.5 million shares (02/03/10). They only dumped 1.4 mill over the last dumping period. uh oh bad sign.


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## akkopower (17 March 2010)

Does anyone know the rules regarding notification of share dumping?


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## brty (17 March 2010)

akkopower,

In answer to your question...



> However this stock does not have the liquidity for me to be a player at all.




To me liquidity is very important, it will help minimize slippage, which on some stocks can cost you an extra 10-20% of price (if really unlucky, but without a poor announcement). There are plenty of stocks out there, why risk extra on luck (low liquidity).

brty


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## akkopower (17 March 2010)

A bit of a recap

Bought stock at 61c hoping it had found support.

if it hits 59c i reconsider why i own the stock, the reason i bought it may be wrong

if it hits 57.5 i am out, the reason i bought it is wrong.

today the stock jumped btw 59.5 and 60c. Volume was slightly larger than average. seemed to be a few big buys/sells at 59.5c but lots of small buys/sells at 60c to average out to 59.75.


Now i am beginning to ask why should I own this stock. Looks as though we have found a little pocket of support, we will see how strong it is tomorrow.

To me it appears selling is dominant, sudden moves down and smoother moves up. No indication that a big firm is buying stock. No indication of dumping. 

In this instance  looks like a sign to sell. 

If there are no movements up tomorrow I will need to sell, maybe i should have pulled the trigger today, but.......


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## So_Cynical (17 March 2010)

akkopower said:


> Hey guys I am after some constructive critism regarding my trade with VGH.




I don't think value buying and or knife catching is really suitable to your trading rule set, entering a falling stock with a tight stop is a great way to throw money away, i buy falling stocks all the time and your better of doing a staged entry or just having a small average down and no stops policy like i do.

I have watched VGH since early last year and actually recommended it to a mate at work last week, with the proviso to buy under 60 cents ....gave it serious consideration myself late last week and early this week but passed to have a go at MTS and PRY.

VGH will recover given time...IMO, success when buying stocks like this requires patience, great timing and a longer time frame than a day or 2.


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## Synergy (18 March 2010)

Personally I'd be quite happy to hold this now with a stop at 57.5c.

If I did hold, I certainly wouldn't be selling until it started to move somewhere. Looks to be building potential currently and could very easily return to 80c.


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