I’ve been able to take advantage of the recent run up, so I’m not complaining, but there’s always one trade that gets away from you. I realize I have a major flaw in my trading, and it’s that I always sell too soon. You may have the same problem and quite frankly I’m not sure that there’s really anything that can be done because it protects me just as much as it harms me.
I was in Motricity (MOTR) on October 18th after it dropped below it’s 50ema on the 60min chart. It’s a volatile stock and one has to be careful because just as fast as these rise, they can give back all their gains. I ended up bailing the next day for a meager 2% gain, and if I remember it correctly, it was because I felt the entire market could correct and this was not the type of stock I wanted to be in.
This stock was not in my major watchlist and I remember being nervous about the trade due to the small float. I liked the strength on the daily and felt it had the potential to at least get back to it’s highs around 22. I should have stuck with my intuition. The sad part of it all is that it never violated any of my sell rules.
Lesson: Strong stocks that look overbought are most likely just getting warmed up. Keep experimental positions (outside your normal trade plan) to a much smaller size relative to your other positions. Allow the trade to play itself out according to your rules. I could have had a near 100% gain that I could be bragging about instead of lamenting over “what ifs.”