Recovery
Recovery is what I call getting out of drawdown on a mean reversion play. I used to be very good at recovery. Now I'm really, really bad at it. Read Fog of Shame post if you want to understand why. Rule #1 is don't lose money on the way up and unfortunately I failed at that and the pursuit of the short became a quagmire.
Today was a recovery day on CRCL. I came into today with a cumulative -48k loss trading it the past 2 days. It wasn't easy and it's still not "easy money" by any means. There was basically one breakdown impulse move from 245 to 220 that represents the entire profit for anyone who took a short. I was expecting 180-200 today. It's far from ideal.
I started this day just kind of declaring that the top was in CRCL and I have to just swashbuckle my way into it. That means whatever the pattern is, I hit the bids, start from there, and trade around my position. It's very loosey goosey and it has often led to many errors when I'm unable to keep all my trading plans and bigger expectations (and emotions) on the same page. But somehow I managed to stick to it the entire day.
I held 3300 shares from a $260 avg into that 1pm plunge under 242. I added another 2300 shares to a 6k position. Most of it was at 240 but I tossed some chasey adds at 232.
I spent a lot of time distracting myself and ignoring the price action from 2pm to 3:30pm. At the end of the day, it still acted like shit (for what seemed to be a textbook setup that triggered) and it spiked 13 pts from the new low of 217 to 230. So I covered down to 3000 shares to end the day, about 1/2 my max position.
I never played options on this. The dramatic IV plunge from friday kinda spooked me from trading options so I didn't try. I would've likely held them too long looking for a deeper target. Someone I know traded the 180 puts -- they doubled into the 240-->220 move and then retraced the entire move back to neutral by the close, despite "closing weak". That's pretty yucky. I only want to play puts when I feel confident I can make 5-10x, as you can see on my SMCI and MSTR posts.
I'm up about 150k today so after the -48k loss recovery, I'm up 100k mark to market at the close, depending on how this fluctuates. I'm giving this one day to see if I'm an idiot and I will likely just cover if this heads back to the 240 breakdown level. I will NOT revisit after that. It really does need to just sell off or else it's very questionable to me. I don't want to feel like I'm solving puzzles and banging my head against the wall.
This was a super hard play even though one aspect of it (the late day breakdown) was textbook. I guess if you had no bias and you trade 10 things a day and you're willing to miss anything that doesn't setup but you then hit that setup, you're an awesome trader and you nailed it the way one should nail a trade. But I don't operate like that anymore, I wanted to be in and take all the swings and fight for price with lots of room.