lbm1 - OK, let's take a look at FEED and since I have zero background on the Ag business, I'll have to look at it through a worn out, broken down, trader's eyes. Please see the Note a the bottom of the post!
OK here is what I see and how I think about it - others might have ideas as well and should chime in too.
First, I see FEED is trading at 7.50 today so in essence you have made a 50% gain on the trade! Celebrate! These kinds of gains don't come along all of the time. Also it is time to protect those gains! Don't get greedy here. IF IT WERE ME I'D SELL SOME! NOW!
Thanks for admitting that you don't have a target. I use to trade that way but the market has schooled me otherwise, so I hope that this helps you to start to see things differently. Just looking at a 3-year chart I see some resistance in the 8 to 9 range way back in the Nov-Dec 2007 time frame, I also get a "feel" for some resistance in the $10 range from 2008 levels. So, IF I owned FEED, I would be thinking about 8, 9, 10 as an initial target, especially since, from the $5 it is nearly a double! But I'd also want to know why I entered the trade - what fundamental reasons did I have for entering the trade? What technical reasons propelled me to enter the trade? How have any of those factors changed since I entered? [This is one of the reasons it makes sense to trade some thing you know - an industry you live and work in.]
Since I have no knowledge of the sector I have no reason to understand why FEED might run to $21. Perhaps someone with stock specific knowledge or sector knowledge has a better feel as to why it should go higher. I can give these kinds of reasons to the junior miner picks that I buy, so that gives me some comfort (an edge?).
That said this week and today I see that FEED has gapped up and run up. I personally get nervous with Big gaps up as there is some thinking that gaps get filled, but this is only part of it. Also I see that FEED seems to have a pattern of trading - a couple of up days followed by several days of consolidation or sideways trading. Today's candle looks "extended" from the 20-day moving average to me so that is a sell signal for this chair. I also note that FEED would have been a beautiful trader if one wanted to follow the 3-5 day pull back method that Oliver Valez profers: strong up trend
So I light of its 'extended' nature of FEED, lower volume today [unless it trade an additional 1.3MM shares in the last hour] on a +8% day and ~50% gain [with no background in the sector and no feel for it], extended above the Upper Bollinger Band, with a Stoch %K at 98%, I'd be looking to protect profits and I would take some off the table. By taking some [1/2, 1/3 or 1/4] off the table I lock in some profits and avoid downside risk. Sure doing so excludes me from upside potential, but I still have part of the position which would participate in any up move. The way I think about this is less about how many dollars I've made on the trade and more about protecting my capital and gains. That shift in thinking is IMHO one of the keys to becoming a successful trader - having the right focus.
At a very minimum I would protect my capital by having a stop loss order at the break-even point. $5.02 PLUS [two-times the trading commission divided by the number of shares]. Now I recognize that depending on your broker one may have a bunch of machinations to go through to have two live order on the same stock! But that is another topic.
If I took some off the table I'd have to decide how much risk I was willing to take with the rest of the profits in the position? Some where in the upper 5s or $6 seems like a resistance level one could set for a stop, others might pick the low of the day from today or yesterday especially because yesterday's low is the point at which the gap starts to get filled. But selling here for me as a trader makes sense since I think probabilities are there it pulls back some and I wouldn't be adverse to getting back in for another run up.
That is just how I see things - fast and furious on the fly from my perspective only. Hope that helps some. Read & follow the disclaimer!
Good luck!
H3
Note: Since this is such a litigious society and SEC rules likely prohibit practicing without credentials I'll add this disclaimer - nothing in this post should be read as specific investment advice. The views expressed here are solely those of the author and are filtered through his experiences and maybe right or wrong. Trading involves risk and losses are possible - what may or may not work for me may not work for you. These are my opinions, for entertainment purposes only and no one should take them as trading advice. Do your own due diligence and consult your own advisers. |
