- Covered SUN (Stop hit)
- Bought VITA
- Sold ROST (Stop hit)
- Shorted GENZ
- Bought IFN
- Sold VITA (Stock got crushed)
I was on track to make money this week, as most of my longs are performing well, until VITA gapped down 30% on Friday morning. I think VITA was a good bet that happened to result in a bad outcome.
In the future, if a stock has the same chart pattern and strength as VITA, I will buy it again. This is because I believe that buying in the direction of the trend gives me an edge, but it does not guarantee success. There is simply too much randomness in the market for anything to work all of the time.
Unfortunately, I have not made any great trades since the beginning of June. As a result, I have less capital in my account as compared to the beginning of June. And because of this, I am trading much smaller. I have developed a position sizing calculator, based of the Turtle Trading Method, that helps me determine my position sizes. For example, if:
- My account shrinks by 10%, then I trade 19% smaller
- My account shrinks by 30%, then I trade 51% smaller
- My account shrinks by 50%, then I trade 74% smaller
- My account shrinks by 70%, then I trade 93% smaller
I have often said that knowing how much to buy is more important than knowing what to buy. The case with VITA helps illustrate this point. A fully margined position in VITA on Thursday would result in complete equity destruction by Friday morning. But by following the rules of the Turtle Trader Method, any one loss is never a catastrophic loss.
Anyway, below are some stocks that are looking good:
This stock may be breaking out:
