Please critique my first trade idea
- Thread starter lentus
- Start date
Yeah, I see that too. But I have a fundamental bias. I'm just trying to time my entry somewhat technically.
In a weak market this stock held its guns and the market showed just a wee bit of strength today and JMIA breaks out of its recent consolidation.
This is a strong stock, not a weak stock, imo.
I'm still in bro. That hammer at resistance does not look good for longs. The breakout you mentioned looks like a false breakout now, doesn't it?
It's 10% move, from the point, when it broke through, that wedge's (which didn't looked like wedge to me, first screenshot/first post), res line.
At which point, do you cut your loosing trade ?
How many positions do you have, at the moment - in your sim portfolio ?
You can see my stop in the original post. I have not moved it and will not move it. It's the upper border of the red rectangle. I placed it above the high in May. The profit target is the bottom border of the green rectangle. I currently have two positions. This is the other one.
https://www.tradingview.com/chart/VFF/LKp6X7CY-VFF-short/
That's way, way - too - low.
Search for swings with RRR 1 to 4 at the very least.
Of-course, you will need to do your homework for that.
This is how it goes :
(based on screenshot below)
although, RRR looks good,
( 1 to 10 at least )
stop loss isn't the best one, we got lows - lower than that, >
so the entry point isn't/wasn't good >
because,
either there isn't many choices (lack of homework/research), for one, to choose from & trader is effect by fomo / desperation, to get into the deal, because he have, so few ideas to choose from,
or,
there is lack of patience (irresponsibility/undisciplined-your money on the line), which results, one placing stops, that far away, from significant areas, because one had, - a bad entry.
Good/perfect timing, when entering position, gives one a luxury, of placing tight stop loss.
Otherwise...10% stops, with 2 positions, is death sentence, for your portfolio.
So :
* do your home work, have a long watch list of longs/shorts.
( if it takes 2 weeks, or even a month, to wait - it's ok & it reduces correlation with the market )
* enter as close as you can, next to significant areas of res, sup
(that will allow you, to set tight stops)
* try exchanging horizontal res/sup , to trend lines.
* enjoy a bottle of good wine, this weekend, with someone that you love.
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Fundamental bias huh?
Did you check how many shares were actually floated during the IPO vs how many shares are currently short?
About 67% of the shares are short.
Now "fundamentally" (without me even knowing anything about the company), its pretty obvious this thing must be an overpriced pig or I doubt there'd be that kind of short interest. So kudos to you for recognizing that. Problem is, unfortunately this game doen't work like that. No one in their right mind would enter a new short position with that much of the float short.
Another thing, I think you mentioned you are paper-trading it. Well that's good. Its a good way to learn. Again without looking, I doubt seriously you'd even be able to find shares to short in a real account. That or the borrow rate would be astronomical.
Also, putting all of the above aside.... Nobert makes a good point too about the amount of data you have to look at. Its a new stock... you need at least a year or two of data to make any kind of T/A conclusions... at least if you are looking at a longer holding period.
Anyway, good luck. Always check the # of shares in the float vs. # of shares outstanding and # of shares short. Write that down.
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Well, yes, there is a lower high that could be used but I didn't think it would give the issue enough wiggle room. For example, if I used it I would be stopped out already. The one I'm using, if it's violated then I would definitely know that I'm "WRONG". Using the lower one - it's just whipsawing in a range around S/R - pretty normal.
I'm not sure where you're getting this number. I doubt such a high % is even possible given to how the mechanics of stock borrowing for shorting works.
https://fintel.io/ss/us/jmia
Also this dude whose livelihood is putting out correct short data says it's only 6.26% of the float.
That's a valid concern provided it's 67% of float but it doesn't seem to be.
Solid advice, thank you.