Alright people I was on vacation last weekend so I haven't done this in a couple of weeks. I have something like 13 charts to throw up today and it will show where I made a big mistake last week with not locking in profits or preventing losses in the review of positions that I have.
As usual I always start off looking at the IWM daily chart which is shown below. Over the last three weeks or so the IWM has moved across the 50 day moving average and everytime it moved below the 50 day the index found support and moved higher. It now finds itself at a level of resistance with its yearly high and the stochastics are moving rapidly into the overbought territory while volume has been fairly stable.
As usual I always start off looking at the IWM daily chart which is shown below. Over the last three weeks or so the IWM has moved across the 50 day moving average and everytime it moved below the 50 day the index found support and moved higher. It now finds itself at a level of resistance with its yearly high and the stochastics are moving rapidly into the overbought territory while volume has been fairly stable.
Attached Files
At the point where the DIA moved down almost $2.00, even if I thought that it was going to continue downward, the correct move is to always guard against a loss. So I should have moved my stop loss to just under where I sold it short to ensure that I did not lose any money on the trade. Adjusting for the vig I could have placed a stop at $126.00 and still would have walked away with a $17.00 profit. I know $17.00 ain't shit, but now the diamonds moved up and I got stopped out at $128.31. This represents an 1.6% loss which isn't much but a look in actual dollars shows that I could of had a $17.00 profit but settled for a $214.00 loss with the vig attached. That is a $231.00 swing all because I didn't adjust my stop loss. A move that takes all of 30 seconds to do.