@CTUCyberGroup Lesson: Stop Chasing!
With Fausto out of the office on a conference today, the Live Trading Room didn’t miss a beat! The day started off great with some big winners in $GWPH $DAL $P and $SVU. Even into the afternoon we kept things rocking with $DAL $SWKS $SVU and $DYN. Although today’s topic is going to once again be on $GWPH just like yesterday because following suit it was the biggest winner again.
I was talking to one of Fausto’s students earlier, who won big yesterday on $GWPH. Unfortunately today he gave back half his profit trying to trade it again. When you look at today’s overall graph you’ll see a high of over $73, which starting out the morning at $64 made for another huge winner. What most people who aren’t traders won’t understand is it had some major shakes to get there. This particular student after seeing it spike all the way to $68.50 decided to join in on the fun and go long. Unfortunately as you can see the stock than dropped all the way back to $65. No trader in their right mind is going to hold a position while it’s dropping over $3. One of Fausto’s main lessons is to limit your losses and in this situation would have had to be done immediately. Unfortunately hind sight is 20/20 and at 1pmET you would have realized you would have been fine just to hold it, that would not make for an educated trading decision. The main point here is that when a stock starts to take off, there is a lot of commotion which sometimes will make a trader immediately jump in. Unfortunately most of us know, when we chase, we lose. Make sure you let the trade come to you. In turn you buy at a better price and will increase your profits and limit your loses.