Why I Bought YMM Yesterday When The Market Was Selling Off

I wanted to share with you why I took up a position in YMM on Friday. We’ve got two buy points here. The first is on November 26th, I missed this one but it’s a really good one coming off of a moderately strong earnings reaction.

You had to be patient to capture the second one because it was 17 trading sessions before it became buyable again. But in those seventeen sessions it ran up 30%, pulled back 16%, and then got really really quiet for two days.

The day before I bought YMM it printed a tiny inside candle with the lowest volume since the most recent earnings reaction.

It was looking like go time, but we had a problem, the market had gone to shit the two trading sessions before and was looking weak premarket on the day of my planned purchase.

While this was cause for concern YMM hadn’t been trading with the market as a whole during those two days, so I decided to make the purchase if it took out the $11.03 pivot by placing a stop order for $11.07. I decided to take a 1/4 size position instead of the planned 1/2 and to move my stop up to the low of the day the first chance I got.

The market did indeed gap down at the open but I ignored it and let my stop purchase order do its’ thing. It executed while the market was still down and stayed strong all day before finally having a great close.

I’m still not convinced that this is the right time to be taking on a lot of risk, so I’m going to move my stop back down, but only to the low of Thursday the 19th’s inside day for 2.44% risk.

While this trade is looking good so far I made a crap trade in IONQ which I documented here. My NVDA bottom fishing trade is going well though.

Stopped Out On January 2nd

You’re probably wondering why I moved my stop below December 19th’s low. When I set that stop it was above the 50 day moving average. Since the 50 day can be a very strong support level I decided to move the stop a little below it for 4.50% risk, which I felt was very acceptable considering my position size.

After reviewing the trade I still don’t mind that decision. But what I should have done was move the stop up as the 50 day rose. My stop was too far below the 50 day by the time the stop was hit for it for the moving average to be relevant anymore.

Lesson learned. I would still have been stopped out but my loss would have been closer to 2% than 4%. That might not seem like much, but if I make multiple mistake like that over the course of a year they will add up.

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