Thursday, December 6, 2007

KBH- Wrong Exit Plan

I've noticed something very interesting lately about my exit strategy. I haven't been scaling out like I used to and according to my log my performance has take a huge hit because of that. Before, I'd sell half my shares at a 2% gain, break even and let the rest ride. Reason why I stopped because the cost of doing business with Zecco will kill me in the long run. So I stopped that one extra sell so I could pull in a higher R multiple. Not doing that scale out method has cost me a lot in profit not taken. I need to be able to lock in some profit and break even because I don't know of any other way that will work for me. I just need that ability to sell for a gain and then let the rest ride.


What I'm going to be doing is use the rest of my free trades at Zecco and then start moving over to MB Trading where I'll be charged 0.5 cents per share. Which something I can work with. Plus it'll be integrated into Quote Tracker which I use and love so that'll be awesome.


For my trade in KBH this morning. In hindsight it's a perfect trade. I got in at 21.73 early this morning. I hit my 2% target but didn't take any profit and I let it dwindle down because without scaling out I don't know when to sell so I'm basically deciding to sell on the seat of my pants. I sold at 21.92 which looking back now was a horrible place to sell consider the stock is now around 23.10 which would of been a roughly 12R gain.


This same situation has happened in the past. In fact I think it was a few days ago. I sold out early because without being able to scale out I don't know when to sell and I sold early and left a 18R gain on the table. I have to be able to scale out and Zecco won't allow me to on a financial front so I'll be moving to a place where I can employ my strategy at a cost I can afford over the long run, which is MB Trading.


kbh trade chart

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tonyleachsf said...

Sorry to hear you're thinking of leaving Zecco again, man. I'm curious about this 1/2 cent a share deal though - they're website says 4.95 a trade...

tradeswing said...

I know, I gotta do what I gotta do to survive. They have 3 different trading plans Plan A,B,C and Plan A is based on per share which I'm pretty sure is 0.5 cents.