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RGIN - Lesson Learned

publication date: Jan 31, 2011
author/source: Mark Messier
By Mark Messier

I broke my own rules, and I paid for it.  Thats basically what happened in my RGIN trade.  From the surface and by looking at the FDA filings in our post here (LINK) it seemed that RGIN had a lot going for it- and I still believe that it may.  However, looking back through the crystal clear vision of foresight there were some problems.  Only by looking back at it now and examining it objectively can we be made into better traders.  

The reason for my trade total was strictly risk tolerance.  Generally if I get a 15% loss on a stock I will evaluate whether or not it is worth continuing a position.  This morning I took a risk doubling my position at $.625, which obviously did not turn out like I expected.

Here is what caused my loss:

No firm catalyst date - My commitment has always been to stick to plays that have FIRM clinical or regulatory catalyst dates.  Companies that have FDA PDUFA dates, FDA Panels, clinical trials, or other events that are definable is what makes the "Run-Up" method effective and consistant.  RGIN, while having some sense of regulatory catalysts, did not fit into the "FIRM" category, so I could not plan my exit or hold up until a certain point.

OTC Stock - Generally Io avoid trading in stocks that are on the OTC, and not widely traded AMEX or NASDAQ stocks.  This is not a firm rule, as GTHP is an OTC stock, but it has a defined catalyst (PMA and likely FDA Panel) and FCSC has a PDUFA date.

Companies History -  There really is not much of a history to RGIN, which can lead to poor investors relation, PR management, and other 'growing pains'.  This has obviously plagued RGIN.  The investigative journalism of @crusadernz uncovered this.

Adjustments for the future  

As traders none of us know it all.  Trading is a learning experience and we make mistakes.  The key is to learn from these mistakes and made adjustments.  This is what we plan to do going forward.  

On a personal note, 100% transparency has had an unexpectedly negative impact on my personal trading.  While in the past I may daytrade or jump in and out of positions on stock movements, I held held positions to my detriment to avoid the perception of 'front running' or profiting at my subscribers expense.  Two examples of this are RGIN, which I would have sold above $.80 and FCSC, which I would have sold during one of its spike.

Changes to BioRunUp

In order to protect our subscribers from buying into spikes created from our purchase of an OTC stock, we are only going to tweet the purchase of an OTC stock once the market closes.  We feel that this should limit the effect of those day trading off our purchases and causing others to buy in on an artificial spike.  This rule is in place immediately.  We feel that it is important change to protect our subscribers and yet maintain our commitment to 100% transparency.