MOS hurts, TSRA heals...

So MOS shot back up, but my stops triggered properly and it only hurt me something like $40 or $60. Or something.

I initiated a fun TSRA play last night:
BUY +250 TSRA MARK+.10 WHEN TSRA MARK AT OR BELOW 18.55
I've stopped setting flat out limit purchases. The common wisdom is to never buy at MARK but to always place a limit order and wait for the market to come to you. Anything else is chasing and can be real trouble; you can almost always get a better price.

With a stock as volatile as TSRA, though, if it starts the day by shooting straight on down, it can be painful.

Say TSRA opens at 19. You have every intention to buy at 18.75. The market opens and it plunges downward, to 18.75, where your LIMIT order triggers. It then continues on its downward march to 18.35, before turning around. Here's the issue: Every penny below your purchase price is a penny you must now make back UP in order to come close to profitability.

One defense against this is the trailing stop on the BUY side with a threshold trigger. I set a trailing stop of 10 cents, only once it hit 18.55. What this means is that I can expect to pay no more than 18.65. But what it further means is that if TSRA is intent on tanking early on, I won't buy into a downtrend. My trailing stop will follow it on down, until the momentum shifts by 10 cents.

Now, on a very volatile stock with considerable spikes and lags, you can easily have a stock drop 40 cents, gain the 10 cents needed to trigger your buy order, and then promptly resuming its demise. I've had this happen. Twice. It then promptly ran into my STOP and sold me out, causing me to loose twice in a row. Things to carefully consider then: set your trailing stop level at something intelligent, based on a stock's tendency to spike and lag and its typical volatility. Truthfully, 10 cents is probably too anemic, but going much higher than that results in lost profitability; every cent the stock has to regain before you buy in is a cent you don't earn profit on.

Further, set your emergency stop further out. I should've had mine at 17, but I figured 18 wasn't going to happen. I was very, very wrong. And sad.

Yesterday, the stock started at 18.69 and started its way on down. It hit a day low of 18.33 before turning sharply and heading on up. It gained 10 cents and my trailing stop triggered in and I rode an amazing little wave on up to $19.90-ish, before it caught a lag back down to 19.74/19.55 and sold me out right about there. Still, on 250 shares, that was a profit of $272.

I'm doing something nearly identical today. I won't touch it if it doesn't bounce up at all during the day; my emergency stop is set for 17 and I think that's been a healthy support level and if it hits that, shit's hit the fan already. But holding it for a day or two is smart; it'll touch on 20 again and then back back off. A stock like this is volatile yet generally so within a range and relatively predictable. Naturally, I can get myself burned with too cautious stops or bad trailing stop levels, or if the unthinkable happens and big news causes an epic gap. But for now, it's fun and a potentially good play.

Tomorrow's order:
BUY +250 TSRA TRSTP MARK+.10 MARK GTC WHEN TSRA MARK AT OR BELOW 18.55
SELL -250 TSRA TRSTP MARK-.16 MARK GTC TRG BY #46617 OCO #4661 WHEN TSRA MARK AT OR ABOVE 19.45
SELL -250 TSRA STP 17.00 GTC TRG BY #4661 OCO #46617