Some days are better spent in bed, or on the golf course, than trading. Today was one of those days for me.
In spite of the fact that the S&P futures showed strongly down in the premarket, I found NOTHING that interested me to short on a gap. So, like an idiot, I found a couple of stocks I could go long on a gap with. The best news first:
DELL had gapped down and looked to be a pretty safe bet to close that gap, given that tech stocks are leading the charge right now. I got in at 29.60 and set a 1/4ATR stop, which was 19 cents. I felt pretty comfortable with that. If I was right, I had a long ways to go to close the gap. If I was wrong, I would know pretty soon. As it turns out, the stock just fiddled around after I got in – up a little, down a little, up a little, down a little. It approached but never breached my stop loss. In the meantime…
…CROX had gapped down too, and I decided it was “due”. (I think there is a “trader’s fallacy” lurking in that thought.) So, like an idiot, I jumped in long at 45.57 and set my stop at 44.40. I watched CROX wander aimlessly for a while before it decided to head south and take out my stop for a lovely 1R loss to start the day. This led me to…
…the decision to try to capture at least a little profit in DELL once it turned positive. Once I was up a bit, I set a trailing stop at 10c. I ultimately got stopped out for a .8R gain. But, after looking at the rest of the chart, I got fidgety too early. Had I left my initial stop loss, or even trailed at 19 cents, I would have picked up at least an additional dime, if not an additional 16 cents.
The lesson is patience and compartmentalizing. I allowed the CROX loss to get involved in my DELL trade, which resulted in me leaving at least half my profits on the table. If I had let my profits run, I’d be a happier guy right now.
I also shorted WFC late in the day on what appeared to be a nicely formed continuation flag, but I was wrong for a 1R loss.
I also tried a couple of swing trades today with little downside and what appear to be strong upside: NOK and AMAT. I’m short NOK at 39.49 with a 40.01 stop and long AMAT at 18.73 with a stop at 18.43. I’ll report on those when the positions close.