| Author | Source |
|---|---|
| u/NHNE |
Preface: Please upvote this to combat shill bots. This NEEDS to be made known to all diamond hand apes, but itâs not financial advice.
So youâve been combating FUD, HODLing, reading DD, and buying the dip cuz you like the stock. Congratz, you have been doing well on the front lines and youâve been surviving. But this is actually just the easy part. The hardest part is actually knowing when to sell and actually turning those shares into tendies, because obviously it doesnât matter how much we hold if we mess up during the squeeze and fail to capture most of the value of the shares. And thatâs why weâre going to add a wrinkle on your ape brain today and discuss about your EXIT STRATEGY.
This really pains me that a bunch of apes have been asking what an EXIT STRATEGY is, as this is something ALL apes should know. An EXIT STRATEGY is your plan for how and when to sell your shares. This is arguably the most important part of trading, as this directly affects how much money youâre getting. Obviously weâre not going to rely on just emotions, or luck, or just YOLO / 360noscoping the sell button arbitrarily during the squeeze, but weâre gonna use our wrinkles to get a better educated guess as to when weâre going to sell our shares. Not knowing how to sell our shares well will not only give you as an individual less profit, but also might hinder the squeeze and rob the rocket of rocket fuel, meaning the squeeze wonât be as high as it could have been, and meaning ALL APES will have less profit. So read, learn, grow a wrinkle or two, and donât fuck it up for the rest of us!
There is already two EXCELLENT DDâs on this, and just in case reddit dies during the squeeze, or if these posts gets deleted, here is the archived version as well; copy and paste the articles themselves or the links to save them just in case.
Wedges and Triangles:
https://www.reddit.com/r/GME/comments/m073v6/exit_strategy_dd_a_comprehensive_guide_to
https://web.archive.org/web/20210309074023/https://www.reddit.com/r/GME/comments/m073v6/exit_strategy_dd_a_comprehensive_guide_to/
Short Squeeze Case Study: $DRYS
https://www.reddit.com/r/GME/comments/m0r4kg/gme_exit_strategy_here_is_what_i_not_we_i_am
https://web.archive.org/web/20210319103103/https://www.reddit.com/r/GME/comments/m0r4kg/gme_exit_strategy_here_is_what_i_not_we_i_am/
Bonus: Elliott Wave Theory https://www.reddit.com/r/GME/comments/m6cebh/why_10000_per_share_is_just_a_stop_along_the_way/
Some new/repeated points that needs to be reiterated or may not have been covered above:
GME holders donât want to sell on the way up, but theyâd want to start selling after the peak on the way down, to minimize the regret of selling at $10k but seeing the stock hitting $1 mil. Plus selling on the way down ensures the stock can reach itâs max price.
We donât need to worry much about paper hands selling early at like $5k or $10k because they make up only a small part of retail investors, and because of the short interest is estimated to be anywhere from 200% - 300% all the way to over 500%, it means our wallstreet bagholder shorters will need to buy these shares back multiple times to cover their position, so even if they buy all the paper hand shares, theyâll need to do it again multiples of times to even start to cover.
The short squeeze isnât going to last for 2 minutes and thatâs it. From previous short squeezes, the build up to the top will last for days, so youâll have PLENTY of time to see it coming. And even at the very top, the price will bounce around a bit before heading down again to earth, so youâll have plenty of time to sell.
When you sell, sell with a limit order, not a market order, because you donât want some freak accident or some illegal shinnanigans where the stock price is worth $1 mil but because you did a market order sell, you somehow got only $50k for your share. If your broker doesnât allow you to do limit sells, itâs okay you can do market order sell, but expect there to be a difference (usually small buy sometimes bigger during times of high volatility) between the market price you see reported on your brokerage platform vs the actual price you sell it at. The problem with limit order selling is that you have to manually view the price all the the time, waiting for the price to hit whatever level you were planning to sell at.Using a stop-limit sell order though automatically activates the limit order after the stop price has been reached, and you can also set the limit sell price that activates once the price reaches that point. Warning, in times of EXTREME volatility, if you set your limit too close to the current price, there is a chance it wonât execute. For example, if the stock is dropping from $1 mil, and you go and spend a minute to set up a limit set order at $990k, by the time you finish clicking and typing, the price could already be at $980k by the time you submit the order, and your order wonât fill. Best to have looser sell limit of like maybe 5-10% below current price, or even more, during times of extreme volatility.If you want to, you can also set a trailing stop limit order, which is something that limits how much you can lose but doesnât cap the gain. The issue with setting a trailing stop limit order is that if you donât set it properly, ie, not giving yourself enough room, then potentially any volatile spikes downwards on the rocket ride up could accidentally trigger those stop loss limits and make you sell prematurely, kicking you off the rocket before it arrives at andromeda. For example, in the $DRYS example in the linked DD, if you set your trailing stop loss to be 10%, then you would have gotten kicked off the rocket at only a little past half way. If you just use a plain old limit order sell, then that gives you the most control. I guess you could also set a trailing stop limit order sell at 10% below current price once the price goes past your target price.For more info: https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins-15#:~:text=A%20trailing%20stop%20order%20is,is%20not%20a%20specific%20price.&text=However%2C%20if%20the%20securityâs%20price,reaches%20the%20trailing%20stop%20price.
https://www.investopedia.com/terms/l/limitorder.asp
https://www.investopedia.com/terms/s/stoporder.asp
https://www.investopedia.com/terms/t/trailingstop.asp
EDIT: Some have told me they canât set limit sell orders below current market price. If thatâs the case maybe itâs better to set a stop loss sell order so when the price hits that stop price, the order will fill. Problem with that is your order wonât execute right away if the price remains higher than your stop price. Or just do a market sell order and hope the actual sell price is close to the reported sell price when you submit the order. Each brokerage behaves a little differently so itâs best to get to know the ins and outs of your own particular brokerage.
Donât panic when the price halts. Itâs supposed to halt when there is a drastic change in price, either up or down. Because of these price halts, youâll have even more time to react when the price sky rockets.https://www.investopedia.com/terms/t/tradinghalt.asphttps://www.investopedia.com/terms/c/circuitbreaker.asp
Make sure your brokerage actually allows you to sell your shares at over a mil. Iâve heard some brokerages have a limit on how big your order can be or maybe have limits to your account itself. Example, if the brokerage has a limit on transactions being less than a mil, then youâd be screwed if youâre trying to sell GME for more than a mil. Also, itâs a bit different than being allowed to set limit prices at like a mil while the current price is still $200. Even for the broker I use, Questrade, they said there is a limit to what price you can set a limit sell order at, and that limit changes depending on the stock price. So if GME rockets, so should the limit sell price cap.
Also, donât ask me about your particular broker, Iâm a Canadian ape and all I know is that Questrade allows for unlimited shinnanigans at any price, cuz I talked to them this morning. With the heart of a partial GME owner, you gotta seize your fate in your own hands and ask your broker yourself. Once you have the answer, what we could do is compile the answers here so everyone can see.
Watch the volume as well. Itâs expected the volume to increase signicantly during the squeeze, probably being at itâs max around half way into the squeeze, and tapering off towards the top of the squeeze. Conversely, the sell volume will be almost non-existant in the middle of the squeeze, and will increase gradually as we get to the top and then down on the other side back to earth.https://www.thebalance.com/buying-and-selling-volume-1031027#:~:text=Total%20volume%20is%20made%20up,were%20associated%20with%20selling%20trades.
Also, make sure you have access to multiple ways to access your account to sell. IE: Donât rely on your ghetto phone at like 3% on the day of the squeeze to sell on your app. Have multiple devices ready, phones, laptops, desktops, all set up to log in quick and to issue sell orders at a momentâs notice.
Lastly, the peak will not be whatever number you want it to be, or whatever number we all want it to be. The peak will be the peak, and it could be what we think or hope it could be or it could not. Donât just blindly hold to a certain number thinking that itâs gonna be the peak. You must always check all the indicators as the squeeze is happening and monitor carefully so you donât miss the peak. All the prices weâve been asking for are theoretical. None of us are prophets. Do your own due diligence during the squeeze, donât rely on others.
âEXIT STRATEGY EXAMPLEâIâm sitting here masturbating and suddenly the price jumps from trading sideways at $200-$300 to $400. I know somethingâs up. So I now actually stay paying attention to the price. The price goes up past $1k. Okay, maybe the gamma squeeze is transforming to the short squeeze. There has been a LOT of halts along the way, but itâs fine, because As the price is rising, in my head Iâm thinking that the share will go past $100k, so if there are slight dips along the way I donât panic. I am also keeping an eye on technical analysis indicators in the above linked DDs to try and guess where the top is. Letâs say the price has reached $1 mil, and it paused there, and the indicators are starting to point to a reversal. Whether $1 mil is the top or not, we donât know, but we can still wait to see if it breaks out and rockets up further. At that point I could:
Put in a 10% trailing stop limit sell order on my shares at $1 mil. If it goes up, then I will still get the gainz, but if it goes down 10%, then itâll fill the sell order. At that point, I have to be okay with potentially getting kicked off the rocket during a volatile down spike, as selling at $900k is still great. And I donât think at that point near the top there would be any more volatile movements of 10% or more, but this is pure speculation.
Use a stop limit order of $950k (if the price is heading down pretty quickly, a $50k difference from the top will hopefully allow my limit orders to all fill) and sell 50% of my shares, and with the rest, wait for the stock to continue to go up or down. Letâs say it starts to drop. It goes back to $900k. At that point, although maybe I donât know if $1 mil is the top, Iâm going to make a gut guess it is, based on indicators and how much I personally want to profit from this whole thing. So then I will now attempt to sell maybe 50% of my remaining shares. I go on my brokerage and set a sell limit order at $870k, which is slightly less than the current price of $890k, to account for the continual dropping of the price. Hopefully most of my order will execute and Iâd have filled most of the order at $870k or higher. In case I still have some shares leftover, Iâd put in another limit order sell at maybe $40k less than the current price, and try again. With the remaining 25% of my total shares, I could then again wait. If the price goes back up, then great, I have another chance to sell for $1 mil or higher. If it goes down, then Iâd sell the rest of it at $700k. Overall, in this hypothetical scenario, because Iâve staggered how I sold, I made sure that I still had chances to ride the rocket up past $1 mil to the true peak, if the peak wasnât $1 mil
$1 mil per share is just an arbitrary price point I picked to illustrate an example. Could be higher , could be lower, no one knows. I donât know how high itâll moon, thatâs why this post exists in the first place, so you do the DD and know the technicals so you can guesstimate where the top is when it happens. The numberes can change, but the strategy wonât. $1 mil is just fun to talk about.
With the way things are going on our sub, I almost can guarantee when the squeeze starts and when the price hits $1000 or higher, weâre gonna be FLOODED with fake DDâs saying that itâs the peak and hereâs why, with lots of technical charts and crayons and lines and fancy trading language and other bullshit to try and trick people into selling. If you donât sufficiently do your DD now and understand why $1000 will NOT be the peak, then I can guarantee you youâre gonna paper hand and sell at $1000. Knowledge is power, and HFs know that. Thatâs why posts like this gets downvoted to oblivion as soon as it comes out. EDUCATE yourself, form your exit strategy NOW, and stick to it through thick and thin, through the FUD FLOOD armageddon that will come.
Adding to this, as mentioned by another user, while r/GME bans gain p0rn until the whole thing is over, r/wallstreetbets and other subreddits will not, so youâre going to see a whole flood of people posting gain p0rn after selling at $1k or $2k, and buying various articles of luxury maybe, like lambos. You have to prepare yourself now for that day when reddit front page is just all GME gain p0rn. Are you also gonna FOMO and paper hand it before GME truly reaches the stars, because the shill tactics then is making it look like everyone else is selling,and youâre afraid of being a âbag holderâ?
Last PSA: I really canât believe it, but some apes donât even know we have a God Tier DD thatâs pinned to the very top of r/GME. Seriously. Do yourself a favour and go there and read all of the DD. If you do, your hands are gonna be super diamond.
EDIT 1: Fixed content about limit selling / exit strat example.
EDIT 2: Some are saying not to sell on the way down because there is no more demand and youâll be caught holding the bag, thus you should only sell on the way up. This is only correct if you assume that the very last few shares hedgies need to buy, the last shares out of all 300%+ of outstanding shares, is bought at the very peak, and after that, demand drops to exactly 0% and there is not a single person buying anymore after the peak. But is that a realistic assumption? Up to you to decide. My thinking is that there will be sellers who sell on the way up, and there will be buyers as well on the way up. But some people will wait until the peak and sell on the way down, just like there may be buyers who wait until after the peak and buy on the way down. I personally donât believe there is a hard cut off at the peak where the buy volume suddenly drops to 0.
TL;DR
Ape ask: WHERE PEAK?
Fellow ape answer: Ape need read DD.
I hit the 40k character limit with this bottom bit so you can find the updated list https://www.reddit.com/r/Superstonk/comments/ml2lnw/28_and_counting_brokers_and_their_sell/.