Trading 201 - Taking profits and losses
Today I took profits in DDD.
My original entry was at 2.15.
The exit nearly nailed the top of the day.
The whole idea is that the green/red guardrails frame your actions. The lower indicators (which have recently been updated to be much improved) provide suggestions and confirmations for the trade.
If you look at the chart below, you'll see that DDD entry was actually conservative (within my framework, not in the traditional market read). I actually waited for my supertrend to curl up before buying it.
Within my framework, I should have existed around Oct 15 where it showed weakness near the lower red line. However, because I was keeping up with the company developments and because I expected them to have a good quarterly announcement, I did not act on it. This judgement call is what makes this a 201 session rather than a 101. I judged to keep it so long as it has not broken the supertrend.
Speaking of judgement, they came out with the quarterly report and as I had expected it was good. There are no more near term impetus to propel the stock higher. And this is another 201 (perhaps even a 301) level thinking - choosing your timeframe carefully. Those with a longer timeframe, are rightly buying it now. For me, 67% gains in 2 months is enough. The money can be put to better use elsewhere.
I set my profit targets to be triggered by weakness at the red line. I did not set it at the red line. If I had done so, and the stock keeps climbing above the red line, then I could lose a lot of potential profits. This is very important. I didn't tell the stock you can only go up to the red line. I asked the stock, is the red line too much for you?
Anyways, here's the chart and you study it at your leisure.
 |
