$LFIN (my take).
Here’s what far too many of the comments on twitter looked like after the T12 halt on $LFIN:
I told you it was going to halt!
Like I said…
I warned you.
I would NEVER have been trading that thing.
Glad I stayed away from that garbage.
If you were following me, you’d never be stuck! Join my chat now.
Way too risky.
Too sketchy for me.
I knew I should have shorted.
$XYZ (ok mostly $RIOT) is the next $LFIN
First, a couple of things to clarify:
If you’re stuck in this, I feel for you. I truly do. What you’re going through absolutely sucks. We’ve ALL gone through something like this in our trading careers. So please understand some of this blog is simply my version of tough love.
Yes, I traded $LFIN A LOT this week.
Yes, I even “called” it several times this week.
Yes, I knew the risk was greater. I call that “super-duper tough”.
Yes, I know 2 traders that are stuck.
No, I was not in it before halt therefore I am not stuck.
NO ONE on the Day Trading planet “knew” it was going to halt when it did, especially a T12. Most thought that there was some sort of shenanigans going on with this company and it would end badly one day.
Was $LFIN more likely to halt than let’s say $AAPL? OF COURSE. Did you see the $LFIN CEO interview on CNBC? Compare that the Tim Cook’s MSNBC interview. See the difference?
Sure, there are lessons from all of this (like everything) but if you’re stuck in it (or not), make sure you take away the RIGHT lessons.
The lesson(s) you take from it should be drastically different depending on WHY you were in the trade in the first place.
If you’re stuck in $LFIN because you threw a dart, chased upside shape, bought because of FOMO and/or entered for some other random reason, you should be upset. If you’re stuck in $LFIN with any sort of size that will do serious damage to your account, you should also be upset. And if you couldn’t tell by the daily chart, the spreads, the CNBC interview and/or just by the way it trades that it was a WAY riskier trade than say $AAPL, you shouldn’t have been trading it in the first place. However, you shouldn’t be upset with $LFIN, the company, the stock, the SEC, CNBC for interviewing the CEO again and giving him some sort of legitimacy and/or the “rigged” stock market. You should be upset with your overall trading process. You should be upset with you. Sorry, that’s just tough love.
If you’re stuck in $LFIN because you were still holding some shares from an A+ entry, there isn’t some big lesson to learn like everyone is claiming. That’s right. If $LFIN set up, met all of your parameters for an A+ Setup, checked all of your boxes so you pushed the buy button, take nothing away from the trade other than shit happens. Now, I know you’re pissed that your $ is tied up during this T12 halt AND you’re going to have you’re a$$ handed to you when it finally does open. However, do NOT let this one-off event change your overall process. Do not let it shake your confidence. And certainly, don’t let it alter your trading in any way. You shouldn’t be mad at yourself. You didn’t do anything wrong. You shouldn’t have "known better" regardless of what anyone says.
The reality is that I, or any active momentum Day Trader, very easily could have been in $LFIN right before the halt. Based on how I traded $LFIN on prior days, I could have been holding 100 or even 400 shares (that would be the Wayne100 or the Wayne100 plus my last third). If I was in from an A+ entry on Friday, I would hypothetically pick $24.25 as one possibility. If the stock opens at ZERO, I would lose $9700. Sure, that would SUCK. Losing $9.70 sucks too. However, and this is the point that I want to emphasize, that loss wouldn’t change a thing when it comes to my overall Day Trading Process. That loss wouldn't blow up my account.
NEVER risk blowing up your account on a single trade.
Keep in mind, MANY are going to disagree with me on this. MANY are going to say trading a stock like $LFIN is just too dangerous to trade. Too risky. There are easier things to trade. Stay away from this type of crap, etc. While I do agree that trading a stock like $LFIN is super-duper tough, I’m not going to say you shouldn’t be trading it. If you’re a momentum Day Trader, it’s exactly the type of stock you’re going to be trading. Don’t get me wrong, you shouldn’t trade ANY stock that you feel is dangerous and/or too risky for you and your risk parameters. If you’re a newer and/or struggling trader and you’re trading large shares on $LFIN, I too will argue you’re going about Day Trading the wrong way. But if you’re an experienced Day Trader who consistently makes $ in the markets, you’re more than likely going to be trading $LFIN.
I’ve been trading full time since May of 2008. In those almost ten years, I actively traded two (2) stocks that did what $LFIN just did. $LFIN and $RINO. Should I let those 2 stocks (out of the THOUSANDS+++ I’ve traded) alter my behavior in any way, shape or form? Hell no. Worrying about the next stock I’m trading on Monday maybe “being the next $LFIN to halt” would be a complete waste of my brain power. And let’s be honest, I don’t have much to waste, ya know:)
Will I trade the next $LFIN? Since NO ONE knows what the next $LFIN will be, I might. If a stock gives me one of my A+ Setups, I’m pushing the buy button. Why would I spend the time/effort/energy/mental capital worrying about it? I’ll worry about the things I CAN control.
So, if you’re questioning yourself and wondering what, if anything, you should do differently on Monday because $LFIN got halted on Friday, I say this:
Do what you should ALWAYS be doing while Day Trading!
Only trade A+ Setups.
Never chase upside shape.
Follow your process and rules.
Don’t be greedy.
Never ever bet the farm.
Oh, and maybe be extra cautious trading the other “cryptos” like $RIOT or a company that sells crappy iced tea that is now somehow into that thing called block chain.
Remember, Day Trading is freakin’ hard. It’s risky too. Managing your risk is always your #1 priority. Even on a stock like $LFIN, you can ALWAYS manage your risk with position size.
Finally, here’s some game tape review of an $LFIN call from last week. You’ll see what a great “clean” trader it was and why we were trading it. Click the image below and you'll be taken to the video.
Thanks for reading!