Beginner Question about Swing Trading Exit

All,

I've been reading many many posts on here and have gained a wealth of information to absorb and digest. This is definetly an excellent board.

As a first post, I'll jump right in. I believe swing trading is term to the method I have been using on US Stocks (practising is more like it..) over the last few months. Looking for short gains on stock prices that fluctuate. I don't use any indicators, just purely price action. So far it has worked quite well, I set a mental stop loss, and have religiously sold on that if prices move in the wrong direction. Of 6 trades made on 3 different stocks I've been watching, 3 were small losses, and 3 were good winners. Overall putting my cash pool up 10%.

Of course today, I was thrown a curve ball. On the image attached, I bough it at point 1 in red, with a Mental Stop Loss set to 2.70, and a potential gain of 3.25 giving me a R/R of about 2.8/1 (..was this wishful thinking on my part?)

Today the price opened at 2.60 (point 2 in green). Now 2 thoughts were running through my mind:
1) It dipped below 2.70, I should sell, as this was my original plan.
2) I should wait until the EOD, as this is the opening bell, and I'm not 'day trading'.

I decided to sell on 1), immediately, due to the belief that the price will head further down as people cut their positions. Of course I was wrong. But was I correct in basing my decision on the openeing price and sticking to my plan? Do others out there trade in this manner and if so, what opinions do have? (even if the opinion is - what the hell were you doing in that trade in the first place :-)

BTW - No 'bad news' was put out that stock, I think it was some mysterious action going on that I wasn't a part of. Maybe there is not enough trading volume in this stock, so its easy to move prices as just happened?

Cheers,

tdrtw

Mental stop losses can be a pain, although I use them, too, quite a lot. I had a swing trade in DMGT,a London Stock, earlier in the year and lost 80p overnight because the management decided not to sell a part of their business. These are things that "happen". I think your system is much the same as mine, except that I have heard that overnight trading is more dangerous in US stocks than the UK because of volatility.

Nothing is perfect. If you are making money, then keep trying and don't change on one bad trade. If you have no stop loss protection keep your trade size at a level where you can take a loss without undue pain.

Best of Luck

Split

Why buy a stock which has been falling for a year in a rising market ?
Why buy it below a previous support level (3) which is now likely to be resistance ?
Why buy penny shares for swing trading ? The spreads are likely to to be too large.

"potential gain of 3.25 giving me a R/R of about 2.8/1 (..was this wishful thinking on my part?)"
You don't say where you got your target 3.25 from. If you just invented it without justification, then yes it's wishful thinking.

If you have a plan, stick to it. Once you start changing your plan during a trade you have lost your discipline.
Losing trades happen - accept them and move on.


Glenn

Hi tdrtw,

I trade exclusively in U.S. Stocks. The charts that you've attached aren't clear on my screen for some reason.

If you let me know the stock and it's symbol code I'll take a look at this for you and let you know my comments.


Thanks

Damian

Gasco Energy Inc.

tdrtw,
Welcome to T2W!
I agree with Glenn; your 5 year chart tells me all I'd want to know about this stock. On that basis, I'd question your entry as you appear to have bought just after it's hit clear resistance at $3.00,so getting out as you have looks wise to me.
Cheers,
Tim.

Easy what are the pro's doin? what do the pro's want? you cant answer those questions yet ?

Then splitlink sums it up nicely

"Best Of Luck"

Although Damian Oakley should be able to provide Pro Analysis for us all here. If he knows what they are doin of course.

Is that sarcasm or are you being genuine? - I can't tell.


Thanks

Damian

Hi tdrtw,

After looking at this company and your trade, I would say that you are classically "bottom fishing" - this stock has been battered since the beginning of this year and now probably looks like a bargain to you at the current price. The stock seems to be generally under heavy distribution from funds and institutions.

I personally can't find anything that I would want to buy in this sector (ie - Oil & Gas Operations) at the moment - there are other stocks in other sectors that are performing much better.


Thanks

Damian