Thursday, December 20, 2012

Trade update 12/20/12

I sold my position in MolyCorp today. On technical considerations. The stock is sitting too heavy on support for the size of my position. Could I sell just part of the position? Yes, I could. But I know myself. If I sell part of a position I will be itching to sell all of the position. Right now the stock appears to want to go down in the short term. I don't know who has been buying, or why, so I don't know what the extent of a decline might be if selling happens. By selling in this way I can clear my mind. If this stock goes down and then immediately goes up to the recent highs I would consider buying some again. IF. If it goes up immediately I will watch it...

I make the point that to me as a trader the price that I pay is a small consideration. What matters is the direction the price is going when I buy, and that is of quite some consideration when attempting to calculate the probability of a profit on the trade. I want my initial buy to show me a profit before I add to the position, and each addition must be to a profitable trade. I don't mind waiting for some time after the initial buy, but don't intend to let the price go very far against me in that case either.

When the buys are spread out over time in the building of a position it has the effect of giving me some measure of patience, as well as ensuring that the trend is going the way that I anticipated. And if I am lucky enough to pick a good stock and get on a full position, I hold it as long as I can stand to do so. Or until it gives me some signal that the easy money is over. (momentum) Yes, I try to just take the easy money. It is not so easy, actually. To do this successfully is the hardest thing I have ever done. It is a constant battle with my emotions as I attempt to "listen" to what the markets are trying to say.

This win (MCP) was a gift. I took a flier on what appeared to be a temporary bottom at $6 and have been pleasantly surprised. The problem with picking bottoms is that it is impossible to hold on forever. At least for me...

Here are charts of MCP, GOL, and STP with commentary on these trades....

How about that RIMM? I think I posted on it some time ago..... I got shook out due to concerns over the broader market quite awhile ago. I always keep in mind the broad market averages and sentiment to the best of my meager ability.

Controlling risk!

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