I have found something similar- on the first day, the sellings (varying degrees). The second day either people start buying back or there is a moderate selloff (for some reason the stocks I watch do not frequently have a large 2nd day selloff). The third and fourth days then depend on that important second day.
If on that second day there is a massive selloff again, I would get the heck out of the position without question. If there is a moderate sellout that hasn't hit my stop loss, then I heavily consider what I am doing and re-evaluate. If starts to go up- either a little or a lot, then there is a greater chance of reaching my recovery point- validating my believe that the security was overly sold off.
I read a study a few months ago by a thestreet.com editor of the longer term performance of heavily % losers in one day. The results were not very favorable in the long term, so I try to enter in and out of a trade (favorable one) in a few days. I don't expect the reward to be worthwhile holding on for weeks.
nyc
[[[[[[[[i too sometimes buy situations like hd. i find that whenever i violate the 3 day rule it gets painful at times because no one can know when the selling will end. hd was up 50% since march so it is possible it could go lower.
the three day rule on a bad news dumpers goes as follows: day 1 the traders bail. day 2 the slow acting mutual funds bail. day 3 you can think about buying.}}}}}}}}}}}
If on that second day there is a massive selloff again, I would get the heck out of the position without question. If there is a moderate sellout that hasn't hit my stop loss, then I heavily consider what I am doing and re-evaluate. If starts to go up- either a little or a lot, then there is a greater chance of reaching my recovery point- validating my believe that the security was overly sold off.
I read a study a few months ago by a thestreet.com editor of the longer term performance of heavily % losers in one day. The results were not very favorable in the long term, so I try to enter in and out of a trade (favorable one) in a few days. I don't expect the reward to be worthwhile holding on for weeks.
nyc
[[[[[[[[i too sometimes buy situations like hd. i find that whenever i violate the 3 day rule it gets painful at times because no one can know when the selling will end. hd was up 50% since march so it is possible it could go lower.
the three day rule on a bad news dumpers goes as follows: day 1 the traders bail. day 2 the slow acting mutual funds bail. day 3 you can think about buying.}}}}}}}}}}}
