These video podcasts are starting to get easier and easier. I’m not known for being a great speaker, but hopefully in time these podcasts become less painful. With that said, we are analyzing the trade in DIA from last week. It was definitely not one of my better trades, as what started out good, turned against me very quickly. Which is why I have stop-losses, and why I never deviate from them under any circumstances.
However, the lessons learned from this particular trade, was that I needed to be more aggressive in the tightening of my stop-loss. There was a very strong “evening-star” pattern that I should have used as a green light to exit my position immediately, but instead my optimism overwhelmed the inherent need to significantly tighten the stop-loss. With that said, my loss was still limited to “1R” but it could have been significantly less.
Oh, how when you feel like you are on top of your game, how Mr. Market can bring you back down to reality!
Here’s the Trade Analysis on RIMM from June 16, 2009