SPCE Trading

I recently had an experience of short term trading and It didn’t go to plan so as “Experience is what you get, when you don’t get what you want…” I thought I’d share it with you.

I follow a few social media pages on youtube and last week a live stream popped up of Virgin Galactic’s first ever space flight from the UK. This was interesting and so I clicked and watched it happen in real time over youtube

Thinking about it, I realised that if the spaceflight went well, surely the Virgin Galactic shares would jump up as it would be an indication that Richard Brandson did indeed know what he was doing and getting closer to commercial space travel. I didn’t need to be first into the market, just close to first, so I watched the live stream and all the successful stages the rocket went through of their planned mission. Live streams don’t usually have an expected “end time” and it was already after midnight and most of the mission was completed so I wanted to get to sleep.

The mission having gone well to that point, I placed my trade to buy shares when the market opened the next day and went to sleep

While sleeping, little did I know, the live stream ended with a statement that the mission had “experienced an anomaly” – so something went wrong. The next day I checked on it and news reporters were spreading information that the mission was a failure. Obviously – I thought – a bad space flight would impact negatively on the Virgin Galactic shares so I went to check on my buy order.

It had not been fulfilled because at 8am UK time, the NYSE hadn’t opened yet. I was therefore able to cancel my buy order and rest easy that I’d had the chance to trade on news, but was able to undo it before I experienced any loss that I expected the new news to bring.

Well as it happens, I reacted too impulsively, both to buy and then to cancel my order. 

I’m not so bold to think I could have timed getting out at the top of the peak so lets assume I sold today – 1 week after the time I invested them freaked out. There would have been a 32% rise in the share price in 7 days. Thats a NUTS return! But obviously I didn’t get this because i pulled out too soon

I know my tolerance for risk is fairly low and stuff like this I see a little like gambling as I’ve no direct control over the outcome, its speculative and completely at the will of the market, also its a “qualitative” piece of information (a bit of news, not a calculable number) that will influence the share price movement so you can’t use numbers to extrapolate the outcome from information you have at the start.

As you can probably tell, I’m a number guy – but I wanted to do it to try and push my boundary and experience something new – so setting that as the goal I succeeded and learnt a few things

I prefer numbers and calculated investments where I can see how things will work. This is great as it gives me peace of mind knowing in detail how things are likely to play out before they do. I can calculate the pro’s and cons and weigh the ups side versus the down side numerically – but this also means that other investing maths boffins way smarter than me, will also be doing this and by very reasonably assuming I’m NOT smarter than them, I’ll always generate a lower return than they will. Also, preferring numbers, I don’t like to trade on “Qualitative” information like this as its the opposite to my comfort zone. 

Personally I’m happy with this as the peace of mind is worth the trade off in returns but on this occasion I stretched myself to give it a go and I got close to a really big windfall. I think if I hadn’t pulled out, I’d be up about £150 about now, which isn’t bad for 7 days.

What does this tell me? (from this very limited experience base)

  • News based, short term trading is a strategy that can make money
  • Balancing the importance of the news and feeling out the markets reaction to it is key – and something that I suspect will take time and trades and therefore money to learn
  • You need to have the willpower to stay in the trade till a reasonable gain is made (but not too much as greedy pigs get slaughtered)
  • This trade made me want to check the stock every single day to see if I was right and I’m not sure if thats a state of mind I’d like to live in – worried about my pending trades – altho I’m sure with a bit of education and practice I could put in some automatic sell instructions to prevent losses. This is appealing and maybe something to investigate in future.

For now, I think I’ll keep watching interesting news and be aware of companies movements and see if I can predict their stock movements before they happen based on news items. I can always play the game with myself without putting down real money till I’m getting more right than wrong.