A Messy, Lossy Day

It’s funny how easy it is to go from a super-profitable session one day, to kicking off with a silly loser the next. Today’s trades serve as a reminder that we must never become complacent after a big win. I’m as guilty as the next person, and my first trade was a loss that shouldn’t really have happened.

Here’s what happened with AMD:

To be fair, that initial price drop — passing straight through the MA and the previous day’s low — showed serious weakness. There were good reasons to think it had further to fall. In hindsight (as wonderful as ever), I should have gone for an earlier entry and bagged some of the initial drop. Ironically I was being extra cautious because I was wary of becoming complacent after yesterday’s ROKU trade!

Still, there’s no excuse for my entry on low volume and momentum. Really I should have held off a few more ticks to verify the move. As it happened, there was no more move, and when that became clear I jumped ship and took a 3 cent loss for my trouble.

Starting the session $30 in the hole is never nice, but of course we don’t think about the money when we are trading. Execution is everything. With the trade logged and execution scored accordingly, it was time to look for something else.

That something else came along in NVDA, a fellow chip-maker. Here’s what happened:

The market in general had turned, so favouring trades to the long side was the way to go. After getting back above its moving average, then consolidating nicely, the price surged upwards. It was a reasonably smooth ride, but when it hesitated I took half off sharpish. I still had a target in mind and with four hundred odd dollars banked and my previous loss more than covered, I decided it was worth hanging in there. The target was hit, I got out the rest of the position, and got to give myself a slightly higher execution score than the previous trade.

The $1,055 profit from NVDA more than covered the AMD loss. That, of course, is one of the golden rules of trading. As long as our winners are (much) bigger than our losers, we can take losses all day and still come out ahead.