Guest Post: Another Quick Loss Brought To You By Prospectus

Posted on February 6th, 2007
Written by Prospectus
Posted in: N/A (old archives)

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

If you are in the “You suck and I hope you fail” camp, then you’ll love this. :)

I went short in Las Vegas Sands Corp. (NYSE: LVS) as a Trader-X short. I entered, set up the stops, and then had to be away from my computer for a while. That always ends in disaster:

lvs-candle-last-3-days_15m-2007-02-06-120720.GIF

Trade Summary:
LVS Short 16 Shares
Entry: $99.00, Stop: $99.60, Target: $96.52
R: $9.60, Exit: $99.58
P/L: -0.97R, or ($9.28)

I’m really bad at picking X-style candidates. None of mine ever make it to the fib extension target. I am fairly good at predicting the direction of the breakout, though, so I may need to revise my profit target a bit. I’ve also noticed that a lot of my trades have gaps over 5%, while X’s seem to be at or below 1%…

I was up over 1R at one time, but then wasn’t around to change my stop to breakeven. By the time I got back, It was back near my entry point @ $99. I decided to stick it out when it started to move against me, hoping it would go back in my favor as it had early on. In retrospect, that’s a violation of my Rule#1–”Reduce and remove all positions that do not prove to be correct”. You’re also only allowed to hope for more profit, not hope for a loss to turn around, so I botched that. This helped me realize that if I’m up 1R, then a retrace back to my entry point means that though the position was correct before, I missed the exit and it is now no longer correct. “Proven Correct” is not a event–it is a state of existence, if you will. It can turn on and off. I need to revisit my rules a bit, I think, and also look at how I define the amount I’m willing to risk vs my win/loss rate.

Please feel free to gloat / heckle / offer any insight! Also, tell me if you hate my new chart format…

Comments

  • I see on StockTickr that Dave took the LVS trade, too. I guess I'm the only one who didn't notice LVS today!
  • Vincent
    Same trade here. Shorted at 99.52, added more at 98.48. Target of fib extension of 97.16.(I trade off of 13m and 26m charts instead) The lack of volume and failure to make a new low from the 11:30 down leg had me worried. That and the volume and amount of run up ~12:06 told me to exit. Out at 98.64 (should have been 98.55, but messed up on the order entry). +1R after the doubled-down position with me staring at the chart the whole time. It was 3R+ at one point when i peeked at the p&l (bad trader!).

    FYI, my trailing stops were 99.91 on entry, 99.04 @ 10:48, (after adding) 99.89 @ 11:27, 99.81 @ 11:40.

    I agree with Phileo. I don't think there was much wrong with the setup or entry. The thing that saved me was the exit. I had MGM and WYNN on the screen, too. LVS was the weakest of the group. They all moved pretty much the same way.
  • @Prospectus: I'm far from being an expert at this, but it seems to me that executed the entry well. It was the exit that needed improvement. The violation of the 5 bar EMA line (blue line) looked like a good exit signal.
  • I took the same trade. Entered at 99.12 but I moved my stop to just over break even once it hit a 1R gain. Stopped out at 99.10. :-( Oh well...
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