A few weeks ago, I took a speculative position in $COCO. Every so often I will make a “casino” trade, where I venture outside my usual parameters, for the sake of mixing it up and hopefully making a quick score. By definition, they will be higher risk entry points than what I usually look for. These trades must be made rarely, and they absolutely have to abide by the rules of risk management.
After losing a quick 7.5% in the trade, I sold out of it without hesitation. Today, the stock is down over 20% on enormous volume. Now, the first lesson here is just to reinforce something you already know–Always have a stop loss in mind. You simply must be willing to admit at a certain price that you were wrong about the trade.
Beyond that, $COCO may actually be setting up for a true bottom here. Perhaps the education stocks will all go out of business, in the face of a student debt bubble and government regulations. However, the huge volume combined with the wipeout to the downside may be indicative of classic capitulation. I am going to wait to see a hammer or some type of bottoming confirmation before I get back involved with this one, if at all. Nonetheless, keep this one on your radar.
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