maxopedia

So I've been feeling a bit more positive lately that I might be getting closer to breaking even, and possibly a profit!

Unfortunately my inexperience once again brings me to my knees.

I went long 100 shares of GU at $15.15 per share at 12:16 on 4/4/2008

Using the last after hours transaction price, I am -$125 on a single trade. This is far outside my R value for this trade of about $30. Because I have held the position for much longer than anticipated, the appropriate R value increased beyond my risk/reward tolerance for this trade - an indication I should have exited the trade.

This is a clear sign that I need to be using hard stops more frequently. This trade in combination with others I have been making lately also shows a pattern of not taking profits when I should.

I could have even exited on Friday with a profit in the $15.40-15.50 range when it was failing to break its previous $15.50 high, However there were no clear indicators at that time on Friday.

I became greedy this Monday morning watching the premarket bids and asks, and GU failed to transact much above $16 in the early minutes on low volume - clear sign to exit the trade profitably that I did not take. It would appear the price spike this morning was a short-covering rally which is an ideal point to be selling into. Damn my inexperience!

Even after failing to exit the trade after the morning tumble, I could have still existed at a brief resistance point of $15.50ish that stabilized briefly in the early morning.

Also, I could have exited at an small loss midday today when the price was ranging between about 14.80 to 15.10 - this loss would have made sense to take because of the very low relative midday volume of GU at this point. Yet another signal that I ignored, much to my detriment.

A hard stop at $14.75 would have given me a $40 wound, but that pales compared to the $125 in losses I am sitting on.

One can only hope that as they live, they will learn.