Don't Panic!

Fear is probably a trader’s worst enemy. I know I am constantly fighting the fear of loosing opportunity when a stock I monitor is moving higher quickly, or that I am going to lose big on a gap the next day.

I have been writing in my journal each time I face that feeling and came up with a check list for both entries and exits on extreme price moves. This check list came in very handy earlier this week on a short position I had on GMXR. It gaped on the pre-market on news of completion of a Nat Gas project and was set to open high at around $10.20 for a 13% loss.

My original stop was set to $9.76 with a market order to trigger for sure right at the opening bell. I decided to put my check list into practice and canceled my automatic stop order before the open to exit manually. Right at open I began to look at the orders on the L2 and the print with my finger on the “Close Position” button. What I saw was that lower and lower bids were being taken and the price began to drop precipitously. I kept my finger steady. I was looking at a 3 min chart where I saw around 9:45 that the price was finding support and began to rise quickly. I pulled the trigger and covered at $9.75 – a penny lower than my original stop and for a 5% loss.

Here is my “Don’t Panic” exit check list:

  1. Check L2 for position sizes and prices.
  2. Make sure that large positions – buy or sell- come from major EDNs like nasdaq, NYSE or BATS. If large orders come from BOSX or CBOE are most likely not real. See previous posts: Here and here
  3. Look at the print and see where the price is moving while monitoring for large orders that support price direction.
  4. Look at 3 min and 1 min charts to visually identify short-term supply or demand levels.
  5. Exit only if all of the above point to price movement against the position.


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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