Friday, January 27, 2012

Update to 10th Trade

Good afternoon,

I wanted to provide a quick update to my 10th trade now that I have officially exited.  For those who read my last post, you saw that I was 'stuck' for about two weeks due to a bad move on my part.  Here are the details and outcome of that particular trade: 

The stock I chose was JetBlue (JBLU).  JetBlue is a great company, but I have quickly learned that airline stocks are risky, to say the least. I'll just leave it at that for now. 

Anyway, here are the details of the trade - I had been watching JBLU fall for several days in a row and I was hoping the following would occur: the stock would level out, the price would slightly rise as buyers took over, and I could scalp about $100 gain, and then get out.  Unfortunately this trade was somewhat undisciplined and I entered too high.  In fact, I should have never entered period.  As my skills in technical analysis improve, it is clear that I was entering at too high of a price.

Nonetheless, I was stuck holding JetBlue since the middle of January (at a relatively high purchase price) unable to exit due to its ~4% drop or so in price.  Unwilling to take a loss, I had to wait it out and hope for a rebound.  To complicate things further, I was extremely nervous to hold over its upcoming earnings.  The stock had recently been downgraded, and as earnings approached the price continued a slow decline.  In fact there was one point where I was down around $4000.  Fortunately, I kept my emotions in check, the stock rebounded, and I was able to exit prior to JetBlue's earnings call.  (Now, for those who follow JetBlue, or read stock headlines in general, you'll notice that JetBlue actually beat earnings and the stock rose another 2% or so). 

That's ok by me.  For my particular situation, I was happy to exit prior to earnings, and I even made $99.21 on the trade.  Hallelujah.  

Now, my profits for January total at $1,297.93.  Think how large of a portfolio I would need to earn that amount in dividends.

In other news/analysis, I am expecting a large market pullback in the near future.  With my limited technical analysis abilities, it appears that almost every major company is over-bought and volume is low.  We'll see what happens.

Take care,

DivPartisan

8 comments:

  1. Very Impressive. The emotion part is the most important. Keep it up!

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  2. BusyExec,

    Thanks for the comment. The most difficult thing for me is not overreacting when it comes to selling when I'm in the positive. I consistently have sold too early, and need to work on exit points. Keep in touch,

    DivPartisan

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  3. That was close! I'm glad you were able to off-load JBLU.
    After more than 12 years I've learned to stay away from:
    - airlines
    - car manufacturers
    - hi-tech companies
    - and travel companies

    Just this rule alone has saved me thousands of dollars over the years.

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  4. Kanwal,

    Thanks for the advice. My two airline trades have been profitable, but definitely were more risky than the others. I appreciate it!

    DivPartisan

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  5. Nice job and a close call! I am inspired by what you are doing Partisan. I once got my head handed to my doing some day trading. You seems to have your emotions in check and that's good. Will enjoy reading your success.

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  6. BusyExec,

    I definitely have 'been down' big several times, but nothing compared to that particular time when JetBlue was down big in pre-markets. Fortunately I didn't sell, and try to stick to stricter entry and exit criteria.

    On a side note not related to your comment at all, I am a little frustrated with people who think active trading is gambling. Your thoughts?

    Take care,

    DivPartisan

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  7. Its not gambling IF you know what you're doing, meaning you have a clear set of criteria and a reason for doing something. As a Brit who invests in UK small caps and the FTSE index, I have learned the hard way that whilst I may understand a good deal about investing and financial markets, I am simply not conditioned for active trading.

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  8. Farmland investments,

    I agree that active trading is not anymore "gambling" than any other strategy for purchasing a company's stock. If you use technical and fundamental analysis, it is investing.

    I guess blindly guessing could be considered gambling, but you can do that with buy and hold strategies as well.

    Thanks for stopping by!

    DivPartisan

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