Lessons learned from a losing trade: NFLD
- Thread starter ACM Trader
- Start date
Hey Rally/RR. the making of markets is keeping me busy. I wish I were somewhere warm, it's 90 degrees and sunny here in chicago today. 
ACM,
So you bot at 15.01 on Monday?
Looks like you learned a lesson the hard way that stop losses should be placed :eek:
So you bot at 15.01 on Monday?
Looks like you learned a lesson the hard way that stop losses should be placed :eek:
No hard stop loss. Only time loss and criteria on volume/stock above 10$. When backtesting, I could not find an edge with hard stop losses. It actually reduced my returns. So no hard stops. Remember that even after that trade this system is still up 48% this year with a maximum drawdown of 8%, back in July.
Clearly stated in the orginal post.
Looks to me that ACM Trader already had everything under control by selling 50% at $12.52 and the other 50% at $10.51.
I would suggest always using a hard disaster stop, even if you don't want to use a closer stop... you could have placed a disaster stop at the level of the November 21st gap up, around $13.50... a gap close would have sent a strong signal to exit...
Forex - forex is definitely one of those who read well a post ! By the way, I just mentioned that I do not use hard stops. Obviously this trade in NFLD was THE exception because of the upcoming announcement after market. Generally speaking some insiders know what is going to happen and buy or sell . This is the only reason I sold at that time. And as I said, with NFLD tradiong now at 4.18 my sales at 12.5 and 10.5 look pretty good. The only reason I did not sell 100% right away is that , often, after a knee-jerk reaction the stocks bounce. It actually happened after my last 50% sale at 10.5 since NFLD closed at 11.5. But the past is the past. Monday quaterbacking is nice but , in the moment, one has to make decisions with what he sees.
Quote from empee:
nice play ACM, you should judge yourself by how you handle adversity, since most ppl are 'elite traders' when they catch a 50 or 100% gap up, right?
good job!
Thanks empee. You are so right. When everything is doing well and dandy, it is easy to feel strong. Adversity is a great teacher. But I think too many traders change their strategies based on the last event. The day after, my system recovered half of the losses I experienced on NFLD. Backtesting and studying the past is very helpful to handle adversity because you know it will happen, you just do not know when. And as I said earlier, a 50% loss or more is integrated into my position size. Believe it or not, this trade might be my best trade of the year, in retrospect. Not my most profitable, mind you, but yiu do not learn from profitable trades.