Wednesday, January 03, 2007


Took a shot at a low volume, smallcap biotech stock.

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1. Why did I take this trade?
Because the stock was showing all the signs of a classic breakout pattern. Volume was there (at least for this stock, 400K shares traded is considered high volume).

2. What was the initial stop?
1% below my entry point.

3. Why did you exit where you did?
I got scared out of my position. Watching the profits shrink instead of letting the trade work itself out played in my head.

4. Is there anything you would do differently?
I think watching the ticker drop from 19.85 to 19.45 made it hard for me to feel confident about my trade. Had I not been actually watching the chart of GHDX during that 0.40 pt plunge just before 12p EST, I would have probably stayed in the trade.

Note to self: This is a good example of the need for a plan to sell half of your position, and keep the remaining half. The first half of my position should have the tighter stop (19.75), and the remaining half of my position should have a looser stop (@19.24, or breakeven).

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