From December 26:
"I bought the QLD at 25.93 on the fill of this morning's gap. I'm front-running a possible breakout, but the risk is less than 3% on the trade. Stop: below 25.23, the recent low on December 22."
In the 10-Minute Chart, the QLD broke below a Rectangle this morning (the lows were 25.68 and 25.69). It turns out that would have been a good place to sell, but I wanted to give the trade a chance, so I stayed with my stop.
Stopped out for a loss of $1,800.
4 comments:
Melf,
Would you discuss your rationale for the stop price? Thanks
Mark,
Yes, look at the second chart of the NASDAQ that I posted on December 24, which was a "redraw." I said:
"If that's the case, the NASDAQ currently is looking for Data Points #4 for BOTH patterns: a final low, prior to a breakout. If we go a little lower here, the pattern in purple could morph into a Bull Flag, then break out. If we go much lower, the Bulls' case is seriously weakened."
I entered the trade at 25.93 on the premise that the low at #4 was in place. I was front-running the trade, meaning that I was trying to get in before an upside breakout, but if the December 22 low of 25.23 got taken out to the downside, my premise fell apart.
Today's low of 24.74 "could be" a morph into the Bull Flag that I mentioned, which then "could" break out later, but as I said, my thesis for the low being in was blown. I don't like to stay in a trade losing money, wondering "Maybe that's the low. Okay, maybe that's the low."
If you ever watch Texas Hold 'Em, I view it as I made my bet at the pot based on my assessment of my hand (my read of the chart), and someone came in over the top of me with a re-raise (they took out my 25.23 stop, which was all that I was willing to risk). I didn't like my hand well enough to call (risk losing more money by holding my position) so I threw in my hand (lost my bet).
You have to lose some to gain some. Unlike me who needs to become more disciplined using stop losses feature.
Usman,
Boy, I can relate. Using a stop loss was one of the most difficult things for me to learn. The expression "It isn't a loss until you sell" keeps us hanging on, HOPING that the market will bail us out of a losing position, but the market can be very unforgiving. UGH...
Money management is so important, which is why I like to know going into a trade where I'm getting out if my analysis is wrong.
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