A Better Entry

Writing my observations on the way I trade a given setup helps me improve the way I execute it. I want to share with you what I learned from a failed trade in ASIA.

I bought ASIA shares on 12/2/09 as it began to break out of a tight trading range. The next day, Thursday,  it sold off pretty hard and got stopped out as the price action drove a few cents down from my stop.  To make it more painful, it moved higher the following Monday and I missed it.

Looking at the chart I realized two things:

  1. My stop was above support.
  2. My risk vs. reward would be better if I bought closer to the lower end of the range.
  3. I was afraid I would miss the trade when I entered.

Learning from my mistake I traded MFW differently. I bought closer to the support of its trading range with a tighter stop just below. Like ASIA, MFW took off last Friday and followed through to the upside today. I sold off 1/3 of my position and adjusted my stop a bit higher with the intention to give the remaining shares some room to run up.

Even failed trades give you valuable lessons if you document them.

About Stock Trade Journal

The information in this blog is not investment advice. Please consult a financial advisor before investing. I have been trading stock since the 1990's and survived the .com crash. I am developing software applications to help me trade better and now I am making them available to help other traders. This blog is also a way to share my experiences and observations in the market.
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