Thursday, October 6, 2016
Trade Review: WEB
As the title suggests..
Let's start with the set-up.
I have been eyeing this stock ever since it held that 76.4% Fibonacci Retracement Level.
But I never bought because there were no signs of strength.
I was waiting for it to breakout of the 20MA.
Yesterday came, and it closed above the 20MA.
I bought. With a cutpoint below the 20MA.
Right after the close, news came out that Ongpin sold his shares at 2.60. That's less than half of the current price.
As much as I'd like to stay away from news and rumours, things like this are bound to appear on your news feed (somehow). It's up to you how to deal with it. I didn't do anything.
I just monitored my position the following day, ready to cut. The stock gapped up at the open and rallied strongly. I did not sell when it reached the 7.00 levels during the first hour of the trading day. Because hey, let your profits run right? And as I saw that things were looking good, I averaged up at 7.15 only to sell it at 7.00 because my cutpoint was hit. That was yesterday's position + today's. I profited some.
But I was still watching it. Waiting for a re-entry.
I saw it go back to AOTS at a price point that offers a really good Risk-Reward Ratio.
I hesitated. I didn't buy.
Instead I bought at a higher price (7.25) only to be shaken out a few flucs down.
I did not follow my cutpoint. I sold a few minutes before lunch. I lost some.
Right after lunch, it broke out and rallied to my target price (9.10) and closed far above all of my entry prices.
Here are what I believe to be my errors on this trade:
1st error - My initial position was bought using the Daily Chart. My 2nd position was bought using the intraday chart. When my intraday cutpoint was hit, I sold everything. An option could be selling only the 2nd position and leaving the initial position and deciding what to do with it at the close.
2nd error - When I tried to trade it again, I hesitated on a good Risk-Reward Ratio set-up. And although I could only say this now, I had recency bias back then. I was afraid that this position, too, would be cut. So I did not buy.
3rd error - When it rallied right after I passed on it, I chased. Making my average entry price, higher than if I didn't hesitate a few minutes back. And because I didn't like my entry, I was easily shaken out.
4th error - OR NOT - The stock broke out of its previous high and rallied strongly to my set target price. During this time, I was in transit. I could have checked it thru mobile. I know the breakout point. But I didn't have the willingness to do it. I just waited for the close.
Overall, I made money but I also made a lot of mistakes.
Don't stop learning.