@CTUCyberGroup Lesson: Stop Using Stop Losses
Another incredible day in the @ctucybergroup! Keep in mind that the Stock Exchange will be closed on Friday, so Monday, Tuesday and Wednesday have been like our usual Tuesday, Wednesday, Thursday. Some mentionable winners today included $SFUN $ZLCS $ZGNX $IDRA and $P. I received an interesting email from one of my students in regards to $P so that’s where we got our topic for today.
If you look at the following chart of $P you’ll see besides the early morning, which was a great short, it pretty much had an uptrend almost all day. There were opportunities left and right to take 20c, 40c, 60, even $1 at certain points. Getting back to the email from my student, they were stumped why on a stock that traded higher and higher they lost over one dollar. They went on to explain that they were in and out 7 times. After giving them a call and getting past the obvious question of why they were in and out so many times, the problem became obvious. In the chart you can see that even when it was going up, it was very shaky. Between 1pm and 2:30pm it went up 40 cents, but had over 5 peaks and valleys. The reason my student kept losing all day was because even though they were correct in picking the direction, the stock would stop them out, and then go back higher. This is the exact reason I teach to not use stop losses when your monitoring your trades. You should have your mental stop there in place to prevent these shakes from cancelling out an otherwise perfect trade. After further analyzing the trades, they would have been right 6 out 7 times. Don’t let this happen to you, use your mental stop losses.