Hey, I made my first trade yesterday at around 10:30am as STP broke through the resistance of 28.00 and got my order filled at 28.03... I gotta say, it was the biggest rush I've gotten in a while I've been following it for a few days waiting for the right time to jump in and I think timed it pretty well. Well two days later, its up about a point from what I bought it at and I'm happy being that its my first trade ever... but I'm stuck with a tough decision. It seems like it just completed a head-and-shoulders pattern AND a doji a the top of its short run-up of the past few days. This combo seems pretty damn bearish. Right now I plan on watching closely as the market opens... if it continues on through the resistance of about 29.00 (which it seemed to stick at for a while today) I think I can relax a little bit til around 32.00. But if it starts to dive, can anybody suggest a good stop-loss point? Thanks for any tips in advance!
Trading tips I could have used when I started... Before you enter a trade, always have your exit plan in place, whether it's a win or a loss. The entry is probably the least important part of the trade. Hope is not a viable trading strategy.
Ditto on the exit strategy. Personally I hate buying breakouts to new highs as they more often than not turn into head fakes.
Oops, I was looking at the wrong ticker. The chart looks pretty good, if it breaks below 26.46 I would bin it.
Oops, I was looking at the wrong ticker. The chart looks pretty good, if it breaks below 26.46 I would bin it.
Looking at STP, it just filled its gap, and is now trying to resume its up trend. Problem I see is that, where the stock is at now is right on its 50% fib level, AND also at resistance. But because on 8/16 the stock did make new highs and broke out of its range, This might give new hope to the bulls, but so far I dont see higher than normal volume for this new up trend, and that might be a problem. The stock is above the 50 EMA, and as long as it stays there, I'd feel fine. What I see happen to me alot is a stock will pullback, and I'll take that to mean the beginning of a reversal. So in a way, the doji is not really a bad thing. It could just mean the stock is taking a breath until it continues upward. Keep support/resistance in mind at all times, TA, and chart patterns will usually signal a reversal right infront of your face, or at least give clues. If this were a reversal, here is what clues I see 1. I'm not seeing higher than average bullish volume 2. Stock has hit resistance 3. The stock broke its 7/19/06 trend line, and this new trend, could just be temporary. 4. Doji forming If I were you, I'd take 2/3 of my position off the table.
Questions you might want to consider: What was your game plan for doing this trade? Have the reasons changed? What was your exit strategy when you put this position on? How long do you anticipate it will take for your position to reach your target price of $32? What kind of timeframe are you talking here? How does the overall market environment come into play in regards to your position? Meaning, if the market starts going lower in September, how well is your position correlated to the overall market's movement? If there is a high correlation, then a declining market would not be a positive development for your position. A couple of suggestions: Identify your reasons for putting on a position. If any of the reasons change, would you still want your position if you were flat in the stock and just an interested observer? Define your stop-loss point before you put the position on. This will allow you to keep hope out of the trade equation. What you do now will depend on your reasons for doing the trade in the first place. One trader may see the trade one way, and I may see it another.
As this is your first trade it may affect your mindset for quite some time, so you really should make sure that you stick with what ever trading system you have developed. Before you entered the trade you must have had some sort of plan of when to get out, whether at a profit or loss. What ever it was, stick to it now- it's really important to practice following your trading plan.