Introduction
Welcome, esteemed traders, to an insightful exploration of my recent AAPL trading experience. In this blog post, we shall meticulously examine the highs, lows, and the profound wisdom acquired. Secure your seatbelts and embark on this enlightening journey with us.
The Perfect Storm
Date with Destiny: 13 Dec 2023
Imagine this scenario: I find myself calmly sipping coffee, diligently scrutinizing charts, and believing I’ve deciphered the elusive stock market enigma. AAPL, firmly ensconced in a confirmed uptrend, beckoned like a beacon of hope. Possessing an RS rating of 87, it seemed to don a metaphorical superhero cape. The question lingering in my mind was whether this was a guaranteed triumph. Regrettably, appearances can be deceiving.
The Not-So-Perfect Buy
Ideal Buy? Nah!
Now, you’d think a strong stock breaking out of a base in an uptrend would be a no-brainer. But hold your horses! This stock had other plans. The volume just wasn’t feeling it. My screenshot dreams shattered like a soap bubble.
The Big Exit
Date with Reality: 2 Jan 2024
Advancing to the date of January 2nd, events took a tumultuous turn. AAPL encountered a substantial selloff during a particularly bearish trading session. The stock’s price plummeted below the SMA 50, and the RS rating experienced a corresponding decline. The situation bore a resemblance to the disheartening experience of a painful breakup on Valentine’s Day.
The Happy Ending (Almost)
What Went Well?
Believe it or not, something did go well. I’d raised my stop loss when I bought the stock. Thank goodness for that, because I sold it earlier than I would’ve if I hadn’t. The silver lining in the storm cloud!
Another good thing about every trade is that you will get lessons to learn from.
The Blunders and Improvements
What Not to Do: Lessons Learned
However, I must candidly admit that I committed some novice errors. I delayed the closure of the position by four days, an action that, in hindsight, proved unwise. It would have been prudent to liquidate the position upon its breach of the EMA 21 or, at the very least, one day following the clear indication that it would not surpass that threshold. This experience underscored the crucial lesson that unwavering patience may not invariably serve as an asset in the dynamic realm of the stock market.
Additionally, I succumbed to the allure of a prior trading base characterized by erratic price movements. Placing excessive faith in a stock can lead to emotional distress, much akin to entrusting your feline companion not to inadvertently topple your morning coffee.
The Harsh Reality Check
No Guarantees, Only Stop-Losses
In the stock market, nothing is sure. You might think you’re on a winning streak, but then reality sucker punches you. That’s why we must always use stop-losses. Not just use them, but honor them like your most sacred vows.
trade details checklist
- Date of Opening Trade: 13 Dec 2023
- Underlying Price at Entry: $196.48
- Stop Loss: $182.13
- Profit Target: $228.11
- Market Outlook: Confirmed uptrend
- RS Rating: 87
- Position Risk (%): 7.27
- Position Risk to Net Liquidation (%): 0.65
- Position Size (%): 8.88
- Reason for Opening Trade: Strong stock breaking out of a base in an uptrend
- Was it an ideal buy?: No, volume wasn’t high enough
- Date of Closing Trade: 2 Jan 2024
- Closing Price: $187.87
- Market Outlook at Exit: Confirmed uptrend
- RS Rating at Exit: 80
- RS Change: -7
- Remarks: Big selloff on a strong downday, price broke below SMA 50, RS Rating fell significantly
- What went well?: Raised stop loss after buying, sold the stock earlier
- Cause of Error / IMPROVE: Closed the position 4 days too late, should have closed it when it broke below EMA 21 or 1 day later, should have avoided stocks with volatile days in the previous base
- Lessons Learned: Nothing in the markets is sure, use and honor stop-losses
- Position Return on Equity (%): -5.37
- Position Return on Equity (portfolio) (%): -0.48
- Position Open Time (trading days): 12
- Position Open Time (days): 20
Conclusion
So, dear traders, AAPL took me on a wild ride, from euphoria to despair, and finally, a lesson in humility. Remember, even in the world of trading, where fortunes can be made or lost in the blink of an eye, there are no guarantees. The only certainty is that you must protect your capital at all costs, and that’s where stop-losses become your trusty sidekick. Happy trading, and may your profits be ever in your favor!
