Closed VRNS

I had hoped that this would reverse and give me a trend that could produce a 20-30% move.  It didn't happen.  When 20 broke I got out. 

Entry 1:  $22.15

Entry 2:  $21.62  

Exit 1:  $22.64 (sold pre-earnings rally to reduce position size going in)

Entry 3:  $20.65

Exit 2. 19.96  (break of 20)

So what happened?  I'll blame this one on recency  bias, as my previous trade in VRNS ran 5 points in my favor before selling off.  I had hoped it would find support and do so again.  There's no uptrend, it was relatively weak compared to the market.  I had several points where I could have exited for profits (indeed my initial exit was successful) but ultimately I paid the price. 

VRNS: Stupid is as Stupid does but dumb money prevails

I violated my stop.  Not a good Idea.  I was rewarded with a reversal a day later: 

 I note my mistake so I make a habit of avoiding this type of trade and don't just see a gain in the trade column.

In retrospect my stop was too tight. (I did not exceed my 2% rule, even with the broken stop).  My initial trade of VRNS identified 20 as the stop.  I should have used that same stop instead of 21.

So why did I stay in?  Low volume pull back, wide spreads and I rationalized that the VRNS was trading at a market cap, which IBM offered to buy the entire company several years ago.  Stochastics are under 6.00 so its very overversold. Others stocks in the sector were bouncing, etc..

The point is I can justify an number of reasons to stay in a stock.  More often than not I will lose money by pulling this type of stunt.  So 50 push ups as punishment for not sticking to the trading plan.

Opened VRNS

VRNS is a blast from the past where I've had some success in this stock. I liked the big move off the down trend.  This provides a good risk to reward type scenario. My stop is tighter which allows more  for more size. The Stop can be placed at days low but this is the type of entry should it hold could produce a 30 to 50% gain over the next month. 

Entry 22.15

Stop:  21.00 .75% R. 

If that it rallies that first green bar will look beautiful:

Longer term trading history is limited because it is a recent IPO.  

Closed positions stopped FB closed VRNS

I had been hopeful that yesterday was just a pause and the upward motion would regain.  To that end, I added to my VRNS position and bought FB.  I closed both today.  It was not pretty overall in the markets.  THE Qs pretty much paint the picture.

First FB.  I set 64 as my target to hold.  It didn't I took the loss at 63.95, which saved me from quite a bit of pain as FB sold hard.  I could look at the chart and see some support at 62 and hope that would hold but that is how you get into trouble.  64 and the 20Ma  was support under my theory.  Took Less than a 1R loss.  I believe that the position size and risk parameters were suitable given the circumstances as this was not set up for a "big" trade.

VRNS:  This one just pisses me off!  I let a beautiful profit get away. In at 25.57 I had over a 20% profit within a 2 week period.  I ended up selling at $27.05 after increasing my position by 20% at $29.28.  So I exit with a profit but just a fraction what I had a few days ago.  The lesson I take away with these thinly traded stocks is that you have to take the profit when it is there because it can vanish quickly.

That being said, in some ways this trade marks the progression I've made as a speculator. My mistakes are still resulting in profitable trades.  In years past, a mistake would be a loss and then would be compounded by bigger losses.

New Buy: VRNS

I have found that IPOs a few months later can present some great setups. VRNS is one such stock bought at $25.56 Stop below 20.

Summary
VRNS is a software company that has mapping technology that allows categorization of unstructured data.  The IPO was successful until a week later  when it wasn't.  I like the bottoming consolidation, which I feel presents a good risk to reward ratio here.  The obvious stop is 20, which is  a 25% move.  Such a move requires smaller position sizing but I feel that's okay because this trade presents good upside.  This stock got everyone excited when it first came out and IPO trades often present a second kick at the cat.


Positives: Revenue growth has been impressive
                 $5.00  Cash in the Bank
                   Backed by EMC
                  Huge corporate client base,  Phillip Morris, EMC, Juniper etc..

I never take a trade on buyout rumors or speculation, but if it happens great.  VRNS has been reported in acquisition talks with IBM. Buyout target: 
"Varonis was in acquisition talks a year ago with IBM Corporation (NYSE: IBM) at a company value of $450 million. Although no deal was reached, no one will be surprised if Varonis, like other companies in its field, ultimately ends up as part of IBM or another computer giant."


Negatives: 25% stop does not permit big size on trade as I would like.








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