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Today I took a couple of hours off the floor and decided to day-trade some
stock, and ran into exactly the same issue:
About 11:20 or so, I purchased 100 shares of MINE at 64 1/8 based on the
trend.
A few minutes later, the stock hit $66 and I thought about selling for a
quick $178 profit. Instead, I watched the stock move back down to $62. It
began making lower bottoms, so I sold 200 shares at $62. I hoped to take
the small loss and make it back on the second trade.
The stock moved down over the next half-hour or so to $60. It sat there for
an uncomfortably long time, so I put a limit order to buy 100 shares at $60.
It hit, and the stock moved down to $58 within a minute or so. I bought at
$60 because that's where the lower Bollinger Band was, and I was going to
try and place the bounce. Unfortunately, there wasn't one.
I attempted to follow the trend downwards. After a few minutes I sold
another 100 shares at 59 1/8. I sat with this for at least an hour - much
longer than I intended. I placed a buy limit at 56 1/4. This time, I
intentionally didn't look at the trend or any of my indicators because I
didn't want to be influenced like I was on the previous trade.
The stock quickly moved down to $56 and hit my limit. I purchased stock and
it moved back up soon after to $58 1/2.
Again, I tried to sell the next leg of the trend downwards, but it never
happened. The price moved up to $60. It moved up so quickly though that I
decided I would wait for it to come back down. I placed a buy order at 56
3/8, which wasn't hit. About 2:30 I moved it to $58 because I wanted to be
flat by the close. The stock ended up around $61, so it was a smart move.
I came out ahead on the day. Analyzing my trades, I once again realized how
hard it is to follow a trend. Much easier to hit and get out, hit and get
out. Had I just taken $100 on each trade, I would have made more money with
less risk. It is far easier to trade a system that gives you 80% winners
than 80% losers - gambler's ruin is less likely also.
rich
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