As a newbie in stocks trading, let me share my gruesome experience participating in IPO's. First, let us talk about what is IPO.
What is IPO?
According to Investopedia is an initial public offering (IPO) refers to the process of offering shares of a private corporation to the public in a new stock issuance. Public share issuance allows a company to raise capital from public investors. The transition from a private to a public company can be an important time for private investors to fully realize gains from their investment as it typically includes share premiums for current private investors. Meanwhile, it also allows public investors to participate in the offering.
In other words, a private company will now become a public company by offering company shares to the investing public.
IPO's dirty little secret
Little did I know about IPO's dirty little secret and I participated in with a chartist mindset. I realized how stupid I am after reading the blogpost of Ms. Gandahko about IPO's which I reblog on this blog. You can read it [here].
Well, IPO's are not necessarily not good to participate. For long term investors who knew how to scrutinize a company by thoroughly researching, reading company reports and all --- is okay. And they invest for the long term.
But from a trader's point of view, I should have not participated in as there's no technical data or price history to study. It's really a gamble if the price will go up or not on the first trading day. I'm a trader, I have no plans keeping the stock for a long time especially if it's showing a loss.
Greed
Well, the whole motivation for my IPO participation was greed. Not being able to buy KPPI IPO due to oversubscription. As you know, KPPI soared to the moon for three days. In the next IPO, I made sure that I will be able to buy shares. AXELUM, HOME. And I did get shares.
My plan for AXELUM was to sell at the moment it shows gain prior to a price dive --- if it nose dive. Well, it did go up for a few minutes but then came crashing down that I was not able to cut immediately. That intraday IPO was really a mind and body crippling experience. I literally froze.
I can't believe I lost, I reentered again (revenge trade) and lost again. The same happened to FRUIT.
Nine months out into trading, it turns out that my biggest losers were coming from IPO participation. Gladly, it didn't wipe out my entire account. I'm still okay with it. I'm really happy with the experience as it taught me never to do it again.
What I learned is that I should not buy IPO but it doesn't mean I can not trade IPO during the first trading day. As long as technical data started to show and you have the strategy to do it... then why not?
What about you? What's your IPO experience? Comment down below your experience.
Sources:
1. Investopedia. Initial Public Offering (IPO). https://www.investopedia.com/terms/i/ipo.asp
2. Gandakoh's Personal Trading Blog. IPO's dirty little secret. https://gandakohpersonaltrading.home.blog/2019/12/06/ipos-dirty-little-secret/
My plan for AXELUM was to sell at the moment it shows gain prior to a price dive --- if it nose dive. Well, it did go up for a few minutes but then came crashing down that I was not able to cut immediately. That intraday IPO was really a mind and body crippling experience. I literally froze.
I can't believe I lost, I reentered again (revenge trade) and lost again. The same happened to FRUIT.
Nine months out into trading, it turns out that my biggest losers were coming from IPO participation. Gladly, it didn't wipe out my entire account. I'm still okay with it. I'm really happy with the experience as it taught me never to do it again.
What I learned is that I should not buy IPO but it doesn't mean I can not trade IPO during the first trading day. As long as technical data started to show and you have the strategy to do it... then why not?
What about you? What's your IPO experience? Comment down below your experience.
Sources:
1. Investopedia. Initial Public Offering (IPO). https://www.investopedia.com/terms/i/ipo.asp
2. Gandakoh's Personal Trading Blog. IPO's dirty little secret. https://gandakohpersonaltrading.home.blog/2019/12/06/ipos-dirty-little-secret/
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