Weird things happening this week in my energetic universe. Last week I made a bit of profit on a stock called LEXG, which is a junior exploration company. The first trade I based on a series of daily gains within any pull back. I traded it for a quick 6.5% profit as a day trade.
The next day, there was a sharp pullback - nearly 8 %. I decided that was an opportunity to get in again at $1.59. This time I held my breath a bit longer, keeping the position overnight. However I sold on the way down at $1.64 when another sharp pullback started. This time the pullback was more than 10% in just a few hours. This all freaked me out and I refocused on some other opportunities. I thought LEXG was going the direction of HHWW, when it's spectactular run up completely blew out back in November, leaving me in a panic selling, situation selling off the last of my position as it went from $3.25 to $1.03 in a day . HHWW never recovered, and is now trading around $0.40.
This week, the universe is giving me some lessons to be more persistent. If I seen the selloff last week in a overall trend for LEXG, kept my entire stake, and sold yesterday to close out the week, I would have made 80% profit in about ten days.
Here is another chart showing the extent of my missed opportunity.
The key here appears to be looking at the right chart. Because of my relative success with the two short term trades, where I was looking at a 5 minute chart, I missed the bigger trend revealed by the 1 hour chart above.
What did I do right?
- On an intuitive level, I was attracted to the LEXG company and their business
- The initial, very even trend felt similar to HHWW at the time I bought. Even daily gains with a number of green candles in a row.
What do I need to do better?
- Look at the big picture trend and stay with it. The pullback was healthy. There were multiple buy signals to support getting in again, all of which I missed because I wasn't looking. If I had seen these signals I could have got back in at say $1.60. Notice how it took off exactly where the previous sellout occurred - at $1.70.
- The sell point would have been at $2.45 at the end of the day, when the bars stopped penetrating the bollinger band. With such a healthy 3 day profit, you have to have a stop in to retain the profit. Once the candles were within the bollinger band, a suitable technical stop point should be the last penetration point of the bollinger band at $2.40. Or just pick a trailing stop of 5%. This would have given a three day trade of $1.60 to $2.40 - 50% in three days.
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