Thesis: The stock is not correlated to the broader market, which is great because I remain neutral / bearish equities for the time being. Prices broke out above a downtrend line that’s been resistance all year, as well as the prior lows, while momentum diverged positively. The risk was well defined, and with prices roughly 30% below their 200 day moving average, the stock looked ripe for mean reversion.
Original Plan: Buy 1/2 a position at the close on the day it broke out, and add on the following day if we got follow through, or a successful retest of support. Take profits near 34 on half the position and let the rest ride with a stop at break-even.
Actual Entry: Bought 1/4 a position at 2pm at 31.48 because I wasn’t going to be around at the close, but did not add on the following day because my first price target was reached and the trade was closed.
|Symbol||Date Entered||Entry Price||Date Exited||Exit Price||Profit (Loss)|
Trading Notes: My position sizing continues to need work. If I’m not consistent with my position sizing across trades, the returns (losses) as a percentage of the portfolio may be significantly different, allowing losers to eat away at gains despite significantly lower losses in percentage terms of each position. If they’re not sized correctly, the high levels of risk/reward that make my strategy successful over the long term will not be able to work as intended. I also got a little too trigger happy on the following morning when the stock opened up 6% and took profits prematurely, leaving a full dollar per share (roughly 3%) on the table. My plan calls for trading at the end of the day, I shouldn’t be trading intraday.
Lessons: Review my trading plan and make adjustments regarding position sizing and entry / exit rules to get a more consistent outcome on each trade. There is still too much thinking that goes on during the actual trading day, which could / should be eliminated by having a plan outlined for every (likely & unlikely) scenario. Overall, not a terrible trade, but another instance of undercapitalizing on an opportunity in the market.
As always, if you have any questions feel free to reach out and I’ll get back to you as soon as I can.