Thoughts on Exit Strategy

I was very quick to sell earlier out of VSCI. Again, in retrospect it was a beautiful winner. I bailed early because I saw the gap between my EMA and the price. I shouldn't be too quick to get out.

 

What that should of told me was, "hey, pay attention now because it might be time to sell". Instead, it was more like "oh crap, get out right now!"

 

Because of my impulse reaction to get out immediately, I gave up a loss that was higher than what my average loss is -plus I left a lot of money on the table. I've been doing fairly well with my discipline in regards to staying away from non performing stocks.

 

Whether I should give a little more leeway with the stocks I trade when they decline a little is something I'm debating. If I do come across a loser that keeps falling, I don't want to be stuck holding the hot potato.

 

I like my exit strategy but I think it would be a lot more effective in executing when the price has had a relatively long run instead of executing the strategy when it presents itself right after I get in.

 

We can also look at my entry. Was my entry really a good place to get in? I probably could of waited another candle or so to see how it unfolds but at the time I liked what it was doing. Saw an opportunity and took it. Unfortunately, my short term exit strategy isn't quite defined. What do I do when I enter a stock and it declines after I get in? At the time I thought it was wise to admit defeat and get out.

 

I don't know if I'm subconsciously trying to justify my mistake or if there is something I can really do to better myself in the future. I know I can't add every little detail from every trade to make the ultimate strategy which is something I seem to be doing.

 

This was one of those trades that got me by the balls and I didn't know how to handle it. I bailed in fear of losing more capital which I thought was a wise move. I need to protect my capital with everything I can because without it I can't trade.

 

In the end, I think what I need to do is just be aware when my exit strategy does present itself right after I get in. Don't be so quick to get out but be on the ball in case I do need to get out. At the same time, after I've had a nice run and my exit strategy does present itself after a profit has been accumulated, a wise move would be to exit. Exit based on my strategy with a profit.

 

After Thoughts:

My strategy isn't fool proof. It's not perfect and that's something I need to grasp. There will be times when I execute everything flawlessly and I don't come out on top. It's the nature of the beast.

 

I know I'll come out on top in the end. My discipline is what's keeping my profitable and I feel I've been honing in on those skills this year. We'll see what the market brings for tomorrow.

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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.