ABG - I closed my short position of 1,000 ABG at $3.20 from yesterday during the last hour of the Tuesday's trading day at $3.24. I was able to keep an eye on the price action and volume with the help of my blackberry. The price was around the $3.20's most of the day and it would just not dip so that I could make an escape with the most minimal losses. The low of the day was at $3.11 and never even tested the $3.00 mark. Volume was creeping up steadily, so I already had a plan in that if by 3PM PST, I would get out quick! After commissions, I finished the day in the red at -$54. ABG closed the day strongly in the green at 13.83%.
This is what I did wrong:
1. ABG finished Monday very much in the red, double digits...and I chased it! When a stock is down big like how ABG was yesterday, I've made it a rule to not chase the stock on it's way down. Plaine and simple - I lost my trading discipline, chased it, and wound up on the losing side of the trade.
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5 comments:
Sorry about your loss and breaking that awesome winning streak.
None the less, I am impressed that you are able to keep your loss so low. Good luck for the next trade!
RJ
Thanks for the kind words of support Ramta! Time for the next play...
that is why it is a good idea to know the ADR as support and resistance. At least you have a guide that can keep you out of a bad trade. I don't know the details of your trade but suffice it to say I came up with this idea after enduring reversals on stocks that seemed like they were going to keep down when I shorted them. It's just a guide, but it works reasonably well.
as I read through the details of your trade I think that you didn't make a 'mistake' so much as that it is impossible to hold anything overnight in these conditions. Using Ramta's calculator you can see that the probability of the stock going red or green can change dramatically based on the market conditions which are unpredictable. However you could easily have gotten a gap down and considered the trade a smart move. The overnight hold is a risk anyway.
JV...I will read about ADR on your blog soon!
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