In stock trading the result of every decision is only kown with hindsight. Today I woke up to news that AONE had signed a deal with an electric car company in the US. The stock was up 10%, after I increased my share count by an additonal 250 shares yesterday.
At first, I thought about not selling the position and holding on to it for the longer term, but the charts were telling me differently. I sold 250 shares at 22.15 thinking that I would hold on to the the other 250 shares for the rest of the day. However, within an another 10 minutes I decided to sell the remainig 250 shares at 21.93. Immediately after I sold it, I felt that I had acted hastily. However, the chart indicated that 23 was a point of resistance and it also indicated that 19.60 was a point of support. The price had certainly jumped a great deal on the news, but more importatantly, it had jumped close to a resistance point which was to be used as an exit point.
Turns out that I made the right decision on this trade. But I only know that because the price closed at 20.40. How was I to know for sure that this would be the right choice to make? I did not, I only made a choice with the information I had. From this I conclude that instead of suffering over every trading decision I should be a bit more relaxed when I make my trading decision and live with the consequences.
The truth is that there is no way of knowing for certain if the trade is the correct trade until after the facts. And that is the art of trading! Making the best decision with the information at hand and living with the consequences, whether good or bad.
And so, I decided to buy VLO again. I shunned it when it was at 17.9 but decided I had to have it when it was pushing towards the high of the day at 18.31. I think this was a premature trade but I don't want to wake up tomorrow to find out that I missed out on VLO rallying back to 19 after forming a decent support at 18.
Thursday, January 14, 2010
Wednesday, January 13, 2010
Gains and Losses
Blogging is more difficult than I thought! It really is a habit that I need to get myself into. It's been difficult in the last three weeks but I will try to be a bit more consistent.
Earnings week got started with a thud! Alcoa reported lower than expected earnings and the stock sold off heavily. I will wait for a further pullback before getting some shares.
My portfolio has churned a lot more than I anticipated. I already have made more trades in the last four weeks than I intended to. My biggest position is ZQK, 10,000shares. This is a specialty retailer selling for less than half its working capital of $400 million. It has equity of $400 million and total assets about $1.5B. I already made about 2.4K on the position but I bought it back and I am currently down 1K. I think that this stock can easily go to 7/share in the next year, so this is going to be a core long term holding for me. Another position that I acquired is AONE. It is a battery company based in China and its IPO came out this year. So far I have a 500 share position and I think I can also make this a longer term position as well.
Today I sold BIOD at $5/share. I planned to hold it but I was afraid that it might tumble down to the $4.40 range. So far I had only held a 1K share position in the company because it is a biotech company. I will buy it back if if breaks below 4.5 or if it closes above 5.2
At this point I want to limit the size of my position because I think there is a crisis coming. What will it consist of? Higher rates, falling home prices, higher unemployment, bigger deficits, and yes - missed corporate profits.
I have not been tracking my day to day performance like I did before but I will start doing that next week once I settle into my new office.
So far I think I am up about 3% for the year, having lost 2K yesterday alone! My goals are very modest. No home runs required but no active trading either. Study the company, the price motion, make a call and watch the results within a day or two. My target holding period will be about 3 days after a major news event. It seems that is how long it takes for the market to fully price in the news before a major reversal.
Earnings week got started with a thud! Alcoa reported lower than expected earnings and the stock sold off heavily. I will wait for a further pullback before getting some shares.
My portfolio has churned a lot more than I anticipated. I already have made more trades in the last four weeks than I intended to. My biggest position is ZQK, 10,000shares. This is a specialty retailer selling for less than half its working capital of $400 million. It has equity of $400 million and total assets about $1.5B. I already made about 2.4K on the position but I bought it back and I am currently down 1K. I think that this stock can easily go to 7/share in the next year, so this is going to be a core long term holding for me. Another position that I acquired is AONE. It is a battery company based in China and its IPO came out this year. So far I have a 500 share position and I think I can also make this a longer term position as well.
Today I sold BIOD at $5/share. I planned to hold it but I was afraid that it might tumble down to the $4.40 range. So far I had only held a 1K share position in the company because it is a biotech company. I will buy it back if if breaks below 4.5 or if it closes above 5.2
At this point I want to limit the size of my position because I think there is a crisis coming. What will it consist of? Higher rates, falling home prices, higher unemployment, bigger deficits, and yes - missed corporate profits.
I have not been tracking my day to day performance like I did before but I will start doing that next week once I settle into my new office.
So far I think I am up about 3% for the year, having lost 2K yesterday alone! My goals are very modest. No home runs required but no active trading either. Study the company, the price motion, make a call and watch the results within a day or two. My target holding period will be about 3 days after a major news event. It seems that is how long it takes for the market to fully price in the news before a major reversal.
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