Pharmaxis - What can You Make from this?

Honestly, it surprised me. To a great degree.  There are so much money to make these few days and I am in the middle of it, petrified. Pharmaxis shareholder, woke up on the 26 of May in a bloodbath.  Pharmaxis reported that the European Union officials indicated that they would refuse the company's application to market its Bronchitol treatment for Cystic fibrosis. The European Committee for Medicinal Products for Human Use (CMPH) informally voted down Bronchitol in a meeting with Pharmaxis last week. Note, this announcement came a day after Pharmaxis CEO sold 500,000 shares for $2.95 each (do you think SEC should look at this?)

Share price went down from 2.81 to as low as $0.76. I know nothing much about Pharmaxis, but I could not resist to nibble a small bite of the company. I bought a few on low $0.80, which got me nervous as the stock closed the day at $0.76.  Yes, I should have had a stop loss, and to be honest I do have (an imaginary) stop loss. But I did not touch the sell button, partly because I don't like being wrong and losing money at the same time (sounds like a Mark Douglas' line from his book - Trading in the Zone, doesn't it?)

Anyway, the next morning, in the first hour, the stock price went back up to $0.845. I was feeling a bit better, until an hour later, the selling was very intensive, and saw the price reached $0.71.  That was 15% swing in one and half hour. Somebody making heaps of money there.

And then this morning, 27 May, PXS went back up again to as high as $0.93 or 30%. The depth look quite healthy too. A director of the company also bought a nice chunk this morning at $0.80..
Now, big question...should I sell it or keep it.. I can't count on my luck too many times, can I..

Do you have the Ability to Ruthlessly Cut Your Loss?

There are few large losing trades that I did not cut, and it just too painful to watch. I know the drill, let your profit run and cut short your loss, BUT..for me it's easier to say than to do it. Luckily, I am also lucky enough to make up from other trades, which at the end left me with no loss, but also not too much of a gain or profit. Things have to change.
According to Mark Douglas, the pain of losing money (by cutting short your loss) is intensify by the  fact that you are making a mistake.

Trading in the Zone by Mark Douglas

I am currently reading a book by Mark Douglas, Trading in the Zone. It's a trading book dedicated to review psychological sides of a stock trader.
I think it's a great read!!

Hastie Ltd (and my trading mistake)

I made another trading mistake few days ago by buying Hastie Ltd (HST.AX). I am not sure why I did it, other than a prove that my emotion still get in the mids of my trading.  I started watching Hastie few weeks ago, when I searched for a high dividend yield stocks.  Hastie caught my attention as it supposedly yields 7.5% fully franked, with payout ratio of 54%. When I checked on the stock, it was in a state of trading halt/suspension. You guess it right, debt, without the mean to service it.

The watching continued, and fast forward, it dropped to 24.5 cents just after the suspension. I thought it worth a punt, I mean how much more can you loose? So I bought a small amount of Hasty at the (dead cat) bounce, and  the minutes after the transaction went through, I had these feelings of (uneasy and guilty) for not following my trading principal. NO RUSH, the stock market will still be there tomorrow!! And I didn't do a proper check of the company before I bought, to realise that most assets are in the form of goodwill. Nothing much real except the debt.

Ok, that's a mistake, but worse than that, when the price started to go down, I ignore it and did not follow my stop. I basically let the lose running. It was just a pure bad trading.