When Stops Don’t Matter

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

I got the idea for Wi-Lan (TSX:WIN) from a (few) previous trades that I made on this stock.
1. Why did I take this trade?

On Tuesday, I bought Wi-Lan (TSX: WIN) on the breakout to new ATH’s. There was decent volume to support the breakout.

2. What was the initial stop?
My initial stop was @ the LoD @7.35. However, I raised the stop to 7.55 just before the markets closed.

3. Why did you exit where you did?

I sold as soon as I could on market open.

After markets closed yesterday, I found out that the company announced some stock offering @7.0 ! Craps, that sucked. But at least they had the courtesy to announce it after market hours, so I could at least prepare myself to get out as soon as I could.

4. Is there anything you would do differently?

The only possible warning sign of this morning’s nasty gap down was that I noticed that there was increasing sell volume into the close yesterday, which of course led to follow thru selling into today’s session. The sell volume into the close was a little worrisome, and nagged me like a thorn on my side. I also remember observing the exact opposite behaviour in FSLR (ie. increased buy volume into the close, with follow thru buying into the next day’s session).

Is this a pattern? I have a hunch about this, so I will look out for this and keep a mental score, but if it’s true, then it is better to reduce my risk and do NOT hold overnight IF there is increasing sell volume into the close (it doesn’t even have to be a selloff, just noticeably increasing sell volume).

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