CBAY Trade on Mar 10, 2016 15:30 from tradephd: Tradervue User Stock Trades.

Play Idea

CBAY, Cymbal Therapeutics, is a penny stock with relatively good fundamentals for a small biotech company. They have 2 drugs in Phase II trials, and 1 drug for Gout treatment just about to go into Phase III trials with a major Pharmaceutical partner. The company has around 40 million in cash and they shouldn't need to raise anymore money until a year for now, or never if they get the right partner for their Gout treatment. Usually, small biotech companies have a lot debt, they do frequent share offerings which causes dilution for stock holders, and have delays and issues with their drug trials. CBAY doesn't have these issues.

I have been following this company for awhile since I started trading and played it a few times. As you will see from the chart above, CBAY is like any penny stock and can be very volatile. I saw it trading around $1.25 to $1.35 which has been a strong support level. So I started a small position of 1000 shares to hold for a multi-day swing trade because their Phase III Gout treatment news was going to be released in the next 30 to 90 days. So I was willing to hold this for awhile.

What Went Wrong

Six days later it spiked to $1.70 in After Hours because of a news release.
I made the mistake of chasing it, thinking that it was going to keep running the next day.
The news was positive, however, I didn't read the news release closely enough and there was one part of the release that mentioned mixed results for one of the tests. This caused the stock to immediately crash the next day.
I didn't have a stop in place and found myself down $500.00.

What Went Right

The fundamentals where still there for CBAY and this news wasn't even about their lead Gout drug.

Over next month I averaged down so that I could get my cost average to around $1.35.
The stock eventually rallied to $1.80 and I decided to sell all 8000 shares at $1.80 for a profit of $1496.00.

Conclusions

Even though this was a really nice profit, this was not easy money, and was pretty stressful at times to keep holding this stock for multiple days. For 90% of the days I was holding this stock, I was losing $200 to $400. This was my last multi-day swing trade because I can manage intraday trades much better. It's better for my personal psychology and the way I like to trade. It's too stressful to hold a stock overnight for a trade that has a history of being volatile. I also rarely trade penny stocks anymore, but this is a topic for another day. However, I still really like CBAY as a small biotech company, I do still hold a very small position in my long term investment account. It's doing pretty well and I'm planning on to keep holding it for an investment for awhile.

What I Learned

Multi-day swing trading is not for me.
Don't chase a stock when it's running higher, wait for a pull back to verify the trend and to also get a better price.