Here’s One Requirement Before You Enter The Trade
Knowing your stock before you
enter the trade is as important as the trigger itself.
Part of being able to actually seize your edge is
knowing what the real risks are, because not all stocks are created equal.
Today for instance, Ceradyne
(
CRDN |
Quote |
Chart |
News |
PowerRating)
was mentioned in our members’ chat on more than two occasions. I also talked
about the stock being volatile, which I try to do whenever I know that a stock
demands either more latitude or decreased size for proper positioning. CRDN
happened to be one of the very few selections that did work out today, although
because of the move, quite possibly made up for some other lessons in stop-loss
management.
It so happens that others in the biz got wind of
the issue later on in the day. I don’t have a problem with that,speaking
personally, but I did sense that the source didn’t know CRDN very well, and
quite possibly did some unnecessary harm to some traders’ accounts.
It’s never easy, but you can always make things a
lot worse by not knowing what a stock is truly capable of before entering the
set up. Personally, I would never recommend that a quick flip of .30 or .40 was
good for a stock like CRDN. It might end up that you end up taking that amount
if the trade starts to work favorably, and then the trade is reevaluated on
changing technical conditions. But since an issue like this requires (in my
humble opinion) at least .35 to .50 initial risk, a small paper profit doesn’t
even begin to make up for those times that you have to do the right thing by
taking a small loss–and in this case that looks to be something more than what
some were pointing to as a trade opportunity.