Chasing Winners
By Cliff Clark
In the last article we discussed chasing losses but do you think it's possible to do the opposite and chase your winners? Have you ever had one of those days where you had two or three quick winners in a row and felt on top of the world so proceeded to push your luck and end up giving it all back? I'm sure you have and so have I.
I mentioned a poker player that said something that resonated with me. “You can't win when you are losing”. That was actually only half what she said, the full line was “You can't win when you are losing, but you can lose when you are winning”. What exactly does that mean? When we are winning we think we are invincible. We start to take chances, maybe gamble a little more and start to take some more of those aggressive trades we probably shouldn't be taking. How do we prevent ourselves from doing this?
The advise is pretty much the same as it was for chasing losses. You have to examine your mind set. Are you calm enough to continue trading or should you take a short break. Being too high is just as bad as being too low. As I said yesterday there are a number of things you can do if you are winning to level yourself out. Try to do some deep breathing, take a walk or perhaps a short meditation. Just take some time to calm yourself and when you feel you have calmed down, by all means jump back in.
Whether you are winning or losing always examine your mind set to make sure you are trading in the right frame of mind.
2 trades for me today with +1.5R total
1st Trade QCOM +2R
148.39/149.97 exit 143.25
12% gap down under pivot support and 50ma after a strong daily double top rejection,. I took it on a congestion breakdown with a fairly wide stop, leaving my 2R target 50c over its ATR, slow but consistent move down with great RW, hit my target on the penny before it bounced.
2nd Trade AQB -0.5R
9.40/9.70 exit 9.56
I rarely trade stocks under $10 and even more rarely short them. I liked this daily chart as it broke its uptrend channel and stayed under a strong 9.50 support line enough room to its daily 50ma. I entered after a pullback with a fairly wide stop but only 1/3 of its ATR used at the time. It failed to break down with the strong market open and stayed in a narrow range.
I actually broke my plan with this trade as I lowered my stop to a pivot where price made a big bounce earlier at 11am with a large seller sitting there. My thought was that if it breaks that level again then it will likely...
1 trade for (-1R)
I took a BD on QCOM. I was worried about the target being close to the daily range, so I took a tighter stop on the 2 min chart. I am looking through PTS right now, most of the examples have 2 options for where to put your stop. It looks to me like one of the stops would be at the bottom of the main consolidation area, and the other at the bottom of where there has been a shakeout or turnaround bar (if there has been one). Due to the daily range I took the tighter one on this. In hindsight it seems obvious to take the wider stop, but in the moment it looked ok.
I was then looking at the 15 min 3BP on QCOM, but the reason I used a tighter stop in the first place was because of the range. The 15 min 3BP would have needed to have gone even further than the wider stop on the 2 min BD, so I didn't take it.
