Dissecting a Trade Not Taken
In late October, shares of Akami Technologies ($AKAM) gapped higher and over the next month it digested those gains in what appeared to be a constructive way. We had it on our radar as a watch list idea on 11/29 (green highlighted day on 30 min chart on the right.)
We DID NOT purchase the stock as it broke above the previous high near 6715 (green arrow) because it had just run a quick dollar to get there. As we know, we always ask “where has it come from?” and do not chase. Missed opportunity is better than lost money.
Two days later, (highlighted in orange) we were going to make it an “official swing trade” idea and buy it above the high of that day at 6776. The stock fell from the open and closed down $0.58. We removed the stock from our watch in the midday video because it was back below the volume weighted average price (VWAP) from the gap higher (purple moving average) and would have been too far extended to purchase.
Our decision to NOT purchase the stock allowed us to avoid a sure disaster as today the stock is currently down $2.86 or 4.29%
1-Control greed and don’t chase
2-Be willing to NOT trade if the risk/reward changes
3-Cash is a position