Where'd I go wrong; Any thoughts?

S

SHORTY

I picked two stocks for long positions near the close on Wednesday. They were:

VVI - forming an ascending triangle, sold off during the day but came roaring back into the triangle (very strong performance for a bad day).

CMNT - Again, Held up well during bad day. Made higher high than previous day but didn't come close to previous days low.

BTW, I closed both positions on the opening.

My only thoughts are I was trying to trade against the trend. I think I'll go back to shorts, at least I have a good record there!:)
 
Well first:

VVI was due to release earnings today, why hold that overnight? Who the f knows what is going to happen?

CMNT: have no idea why you got in the trade (don't know your system) but you probably followed all your rules -- you just have to expect a loss now and then. BTW looks like a great candidate for a bounce off the 20dema to me!

regards/greg
 
I guess I'm showing my inexperience. I picked this quick and didn't know earnings were coming out. CMNT broke through resistance a few days earlier and looked to be forming an ascending flag on strong volume near the new support. Maybe this is simply one to put in the "wrong guess" column.
 
The other thing is maybe nothing went wrong (I'm saying this without looking at the charts)

A lot of trades just don't work out but the key is to take the high probability set ups while just risking something you can handle. When market proves you wrong accept it and stop out--don't try to prove market wrong by holding on.

3 trades isn't enough to evaluate a system. I've had over 20 losers in a row on a system that had an a great positive expectancy. Maybe more tests are in order?

rtharp
 
First, why are you holding overnight? Why not wait until morning unless you have a high percentage chance of it going up the next morning. If a stock closes near its high for the day thats positive, and better yet if the market does too, with good breadth. It's too risky to hold overnight without a good reason. Also, in a swing trade, you may have a profit cushion that allows you to hold on.

Second, those stocks were both overbought like the overall market and were ready for a breather. Wednesday was a good clue that things were turning (Markets gapped up, then crushing the previous days' low while closing near the low). I was fully short 1,600 shares in five stocks at the close Wednesday. Can't say I made much money today though?

If you must buy a stock, put a buy stop at the high of the previous day on a pull back preferably. Then if a stock has buyers it will get you in, if it doesn't then you won't take the trade.

Just my opinion.
 
I'd say your "positive expectancy system" is highly suspect after 20 losers IN A ROW. What are the odds against 20 random losers...in the millions????? eeeeeeeeeeeeeeeek!
 
I agree with your concept of buy stops. My tendency (probably misguided) is to try to get the additional advantage of getting in before the breakout. I work during the day and seldom get a chance to watch these things in real time. I wish I could and hopefully someday I will when I get the experience most of these contributors have. Until I gain the knowledge, I may have to rely on buy/sell stops to confirm the breakout.


SHORTY
A wannabe full-timer
 
shorty,

CMNT was a very dangerous and low probability long on Wednesday because it was (and still is) so far extended from the 50da ma. In fact, it hasn't been this extended since Sept 2000 when it came crashing down. Recommend you always check the price in relation to the 50da ma. It's no Holy Grail but when it's historically extended (and each stock migrates a different amount) it's worth waiting for it to revert a bit more to the mean i.e., come in closer to the ma.
 
Doogie, TradeRX, SHortNFOOL, BuckyLee, Buck Naked and the other user names you like to use ( same IP address)

we have had this conversation before about having a system that has more losers than winners but the winners are a lot bigger than the losers. It doesn't have to be repeated as you won't be convinced .

The post was meant to say Shorty would need more data other than 3 trades to determine a system.

rtharp
 
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