In last nights video, we discussed stop placement and used IDTI as an example of how we might handle a lower open. I had no idea that the stock would, in fact, open lower (and below our stop) but I am glad it did because it gives us a great opportunity for review.
In the Tuesday video, at the 0:43 mark we discussed IDTI. We spoke about how we took 1/3 of the position off with a gain of 0.31, not because that was our profit goal, but because it reduced our overall risk. We then spoke about the stop at the 24.90 level and “not setting stops before the market opens.” The scenario mentioned was to NOT THROW AWAY the stock if it opened below the recommended stop price, but instead to “give it a few minutes to see if buyers come back in and then reset the stop.”
Look at the comments below from chat. (I am in Colorado so the times show 2 hours behind Eastern)
We ended up raising the stop to 25.05 in the midday video and were subsequently stopped out of the balance of the position with a gain of $0.07. Again, it is NOT our intention to make small gains like this, but to let the stock “tell us when it is time to move aside.” I would much rather hold the stock for 4-5 days and take a couple dollars/share profit, but the market told us that was not the correct approach.
I do consider this trade and the management of it to be a success because;
1- Although the profit was small, it was profitable!
2- By adjusting our risk at the open and not panicking we were able to avoid a loss on the 2/3 position we held overnight.
So far this year, our gains have been small. That can be frustrating when you come in with great plans of profitability in the new year but remember, it is a long year and risk management is ALWAYS job #1!
If you can learn to be better about risk management and stop placement (after the market has a few minutes to settle down) I believe that 2017 CAN BE YOUR MOST PROFITABLE YEAR EVER!
If you are reading this and thinking “but I have a job and cannot watch the open” that is something you should try to change! Figure out a way to carve out 15 minutes between 930 and 945AM Est. It will help tremendously with your entries, your exits and your overall results!