Trading for Dummies, Q&A #84

OmniVision Technologies, 30-minute Chart

Questions:

1) Why would you be paying attention to this stock on Thursday, November 19?
2) Is the trend up or down? Would you be looking to get long or short this stock?
3) Where would you get long/short this stock on Thursday, November 19?
4) Where would you put the initial protective stop?
5) When would you stop trading for the day?
6) Where would you exit the position?

Answers:

1) Because it was unusually active, and very volatile.
2) Up. You'd be looking long.
3) Long at 61.01 on a buy stop above the 10:30 inside bar.
4) Initial Protective Stop: 59.80. (max. 1.98%)
5) Right after you enter the position or lunchtime, whichever comes first.
6) Stopped out on the 3:30 bar.

..........

Sentiment was fairly positive in the morning so I was looking long. In the afternoon things turned ugly in the broad market and my position crumbled along with everything else.

OVTI was unusually active and gave a nice bar to execute above at 10:30. Initial risk was under 2% so 400 shares was a good size to get long. Unfortunately the stock reversed in the afternoon and I was stopped out on the 3:30 bar.

Now my trading buddy Steve is fanatical about moving his stop to breakeven as soon as his initial risk is covered. I don't generally do that, but it would have been good in this position. At the very least I should have raised the stop to $60.70 to reduce my risk to less than half of one percent, which of course I didn't do... so I kind of blew it (Steve shakes his head in disgust).

Managing positions is a tricky business and I almost always stick with my initial stop into the end of the day. You can only make so many decisions a day without your mental health deteriorating, and I'm always more comfortable taking the loss that I originally planned to take rather than fiddle with moving the stop throughout the day (or maybe I'm just lazy).

..........

Screen capture of my intraday Watch List:

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