In or out

Discussion in 'Trading' started by kybandit, Apr 12, 2011.

  1. kybandit

    kybandit

    I'm new to trading and have been luck to this point...I made a possible bad trade and I', trying to find the exit...I purchased 1150 shares of POT @ 62.50 and I'm down considerable...Does this stock have any upside left or should I just cut my loss and bail???
     
  2. Roark

    Roark

    Looks like you might find some support around 55. You should prolly just get out unless you're stupendously wealthy. That is a whopping big position. If you're not religious, get religious now. Risk control is your god.

    <img src="http://www.elitetrader.com/vb/attachment.php?s=&postid=3151009">
     
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  3. POT is very oversold and oversold stocks often bounce, but for this stock that will likely be very dependent on what the market does. In the medium term I'm not a fan of this stock.

    As the prior poster mentioned, your position size is quite large. If you hold on for a bounce you have to be prepared for the possibility of losing more. The real question is what does your trading plan call for? Did you not follow your plan, or do you not have one? When I make a mistake, I almost always immediately close the trade. And I don't consider a stock moving against me a mistake, I take losses all the time. I mean taking a trade that was not consistent with my trading plan.

    When in doubt, get out.
     
  4. If you violated your rules or your stop I would probably bail on at least 1/2. Taking a hit for the sake of it will help insure you avoid these mistakes in the future. If it comes back, you're glad you didn't sell all, and if it goes lower, you'll have some ammo to add again if it seems appropriate.

    It's a balance between giving yourself a chance to get some back and learning the important lesson of taking a hit that you'll remember.
     
  5. What you did is called investing, not trading. Traders know in advance when to get out and most never risk more than 2% of their capital on a single trade.

    Assuming your capital was 72K, you should not risk more than $1.5K on that trade, or $1.3. Most would have exited at $61.20 or abouts.

    The stock is not oversold. Rsi(14) is at 42.

    Now, I do not offer financial advice. You should consult a licensed professional. This stock may recover or it may plunge. Nobody knows.
     
  6. Well this depends on your timeframe. RSI(2) is 1.49 (and rising at the moment) which is a very oversold level. Of over 7,000 stocks that have closed with RSI(2) < 5 over the past 10 years, 68% of them have closed higher when RSI(2) returned to the mean (> 50). But the expected return based on this alone is very small compared to the risk.
     
  7. kybandit

    kybandit

    I bailed, losing 6100...I'm no investor, obviously, I'm recently retired and trying to learn day trading...I set aside 100,000. to invest with and until this trade, I've just traded on pull backs...I just bought 350 shares of apple @ 231.50 but this time I set a stop at 230.00...I.m a gambler and have always done with well with gambling, I'm researching this new hobby...This is my first loss trading and lesson learned...
     
  8. short term turbulence. see support around 48. if you could handle pain and have a 6 month time horizon, I would hold. it may bounce before reaching 48 and bounce to your buy price giving you a chance to get out. but I would hold at your buy price with a stop. if it hits stop then exit. otherwise hold until it hits resistance around 69.
     
  9. I call this a "GTFO" situation when one breaks their risk rules .(Get The F*ck Out)

    Another one I like " If you can't handle the heat get out of the kitchen. "

    Lesson learned, control your risk above all. At least you will be around another day .
     
  10. if you can admit this was a bad trade.....and vow never to do this again.....and actually carry it out. YES..take the loss and get out.

    If you're going to do this again, look for a better out. I'd say stop out if drops another 1.5. With POT, you can probably end up making money.
     
    #10     Apr 12, 2011