Need some help to analyze a simulated position that didn't work out (BJRI 10/25/2019)

[Girija]

Hi Everyone,

I am not sure if this is the correct area that I can post this, but thought since it is related to Technical Analysis, I considered it may be the appropriate place to make this post.

I am trying to go back to analyze some simulated trades to see why they didn't work out. For stock: BJRI on October 25th, there was a gap up. So my simulated buy was at the open the next day then on October 26th. You can see days after it pulled back and then began losing.

https://www.tradingview.com/chart/?symbol=NASDAQ:BJRI

It resulted in a simulated -7.61% loss with the stop loss being triggered within 4 trading days. Not good.

A few questions I have been trying to answer for lessons learned are:
1) Should I have stayed out of this all together? but why?
2) Should I have stayed away from a gap up like that? Will it have a tendency to most likely pull back with gap up like this?
3) Is there some sort of indicator or support/resistance, something in the volume that said I should have stayed out? Was there something on the bigger weekly chart that said not to enter the position?
4)Should I have not entered into the position if the stock opens down?

Thank you for any insights you can offer through your experience and mastery to help me understand where I failed and what I could have looked at to make a decision. I am trying to be diligent before putting money on the line.

Lastly, is it okay if I continue to bring additional stocks that I am studying to get insights and advisory for lessons learned from the community? I have never attempted to study from a post-mortem perspective and actually feel like I am starting to learn by digging in deeper.

Thanks to all for any help with this,
Steven

May be you can check if it closes right in the resistance level.
Check if there is a perceivable change in short interest.
If so avoid entering the trade. While looking at the chart it looks like it met the sept resistance level (range)
Do you know why it moved sharply on that day.

 

[schizo]

3) Is there some sort of indicator or support/resistance, something in the volume that said I should have stayed out? Was there something on the bigger weekly chart that said not to enter the position?

 

[stevenmac22]

View attachment 226083

Thank you Schizo! This tells me that I am going to have to incorporate the bigger picture and look at resistance lines as opposed to seeing it look good on the daily chart.

When you had drawn the diagonal line down, is there a reason you didn't draw the line to the 2nd horizontal checkmark?

 

[stevenmac22]

I think you are showing me that the diagonal trend line would have been established down crossing through at the time of purchase on October. I realized connecting the line after the gap leading into November would have been after the fact.

 

[schizo]

When you had drawn the diagonal line down, is there a reason you didn't draw the line to the 2nd horizontal checkmark?

You want to choose a point that lines up the most with other points. I didn't draw a line extending to the 2nd horizontal because PRICE ALREADY CROSSED ABOVE THE TRENDLINE. In such a case, you want to draw the trendline from below.

On the other hand, I would have normally drawn another trendline (line 2). As you can see, prices jumped up and down between lines 1 and 2 (refer to the arrows).

Trendlines are powerful if you know how to use it properly. Unfortunately, most traders have no idea what they're doing.

 

[stevenmac22]

Thank you very much for taking your time on this weekend to explain this to me. I would fit into that category of "not" knowing what I would be doing to get the full potential. You have helped me make the realization that I think I was so caught up in this indicator and that indicator, I had overlooked solid fundamentals/tools that have stood the test of time.