Sometimes it takes a few bites at the cherry to get what you’re after. But there’s a fine line between flogging a dead horse and taking legitimate trades. If a trade does not work out but the stock goes on to present a second signal, it’s perfectly valid to take that second entry. And if that doesn’t work out but a third comes along, there’s no reason not to take that as well. Such was the case on QCOM on Tuesday:
If this was a stock that I did not know well, I probably would have let it go after the second failed signal. As it is, I’ve been trading QCOM on and off for the best part of 20 years. I’m not saying I have a feeling about this stock, because that’s mumbo-jumbo and not something to base trading decisions on. But I do have two decades experience of seeing how it moves, which gives me the confidence to keep taking the signals it throws up when they come along.
Of course, the key to being able to keep taking those signals is to avoid blowing up our account by taking a loss on the failed ones. Getting out at break even at worst means we can take those signals all day long until a winner comes along. Ideally we want to cover our commissins, as was the case with the first one. But sometimes slippage means we lose a little, as happened on the second entry. I’ve shown it as break even on the chart because is was a close as makes no difference. 1 lost cent is a small price to pay for the 49 cent win that came next. So although it took some work, QCOM put another $460 (after commissions and that earlier loss) into my account.
Here’s a trade that went much more smoothly:
Pretty textbook stuff. And when I say textbook, I’m obviously talking about my own textbook! All the trades I post on this blog are from the setups in my book. Setups that have worked for decades, and continue to work day in day out. People sometimes ask me if I have any new strategies. Why change a winning formula? This stuff is simple and it works.