In the realm of stock trading, approaching the market with precision, discipline, and systematic analysis can significantly enhance the chances of success. This blog post unfolds a meticulously planned and executed trade involving the stock COR, illustrating how analytical rigor and strategic foresight can lead to profitable outcomes. Journey with me through a detailed analysis of this trade, from the decision-making process to execution and reflection, all aimed at traders who appreciate the value of a calculated approach.
Setting the Stage for Strategic Entry
The Decision-Making Process
On November 7, 2023, I identified COR as a prime candidate for a strategic trade. My decision was anchored in a blend of quantitative analysis and market sentiment, guided by several critical considerations:
- Underlying Price at Entry: The trade commenced when COR was priced at $196.93, pinpointed within the buy zone—a crucial signal for action.
- Market Outlook: The confirmation of an uptrend in the market provided the green light, perfectly aligning with my criteria for initiating the trade.
- Risk Management Parameters: A stop loss at $187.76 and a profit target at $221.00 were set, meticulously defining my risk-reward threshold.
Timing and Execution
Despite entering the trade at a point where the stock was trading above its pivot price, indicating a potentially less than ideal entry, the analysis of the stock’s accumulation patterns and the overall strength of the market justified my decision. This moment highlighted the balance between precision and adaptability in making trading decisions.
Blueprint of Trade Management
Crafting a Risk-Calibrated Position
I allocated 8.90% of my portfolio to this position, a decision based on my risk tolerance and the potential upside. This calculated allocation was the result of a thorough risk assessment, ensuring my exposure was balanced against the expected return.
Discipline and Precision in Execution
Closing the trade on January 17, 2024, at the profit target of $221.00, underscored the effectiveness of setting clear, objective exit criteria. This approach mirrors the principle of following through on a plan with meticulous precision.
Analyzing the Outcomes: Successes and Lessons
Performance Metrics
- Position ROI: An 11.15% return on investment from this single trade significantly contributed to my portfolio, highlighting the value of targeted, strategic trades.
- Portfolio Impact: The trade added a 0.99% ROI to my overall portfolio, demonstrating the impact of well-executed trades on broader financial health.
Post-Trade Analysis
- Adherence to Strategy: This trade reinforced my belief in the importance of following strict trading rules to maintain profitable trades.
- Market Direction Alignment: The success of this trade further confirmed the importance of aligning individual trades with the overall market direction, a principle that mirrors systematic thinking.
- Reflective Improvements: Reflecting on the timing and target setting of the trade revealed opportunities for optimization, mirroring the process of iterative improvement.
trade details at a glance
opening
- Underlying: COR
- Date Opened: 7 Nov 2023
- Underlying Price at Opening: 196.93
- Stop Loss: 187.76
- Profit Target: 221.00
- Market Outlook at Opening: Confirmed uptrend
- RS Rating at Opening: 91
- Position Risk (%): 4.63
- Position Risk to NL (%): 0.41
- Potential Profit for Position (%): 12.16
- Risk to Reward Ratio: 0.38
- Position Size (%): 8.90
- Reasons for Opening the Trade:
- The price was in the buy zone.
- The market is in a confirmed uptrend.
closing
- Date Closed: 17 Jan 2024
- Closing Price: 221.00
- Market Outlook at Closing: Confirmed uptrend
- RS Rating at Closing: 88
- RS Change: -3
- Closing Remarks:
- Trade closed by LMT order at the profit target.
- What Went Well:
- Closed the deal as planned, maintaining discipline.
- Sold on strength while the price was advancing rapidly and got extended.
- Sold when the RS line had started to decline indicating that the leadership wasn’t that high anymore.
- Bought the stock after it broke out of a solid base that was not deep or volatile.
- Bought while the stock was under accumulation.
- Areas for Improvement:
- Should have set the sell order higher, aiming for a CAN SLIM profit target of 20-25%.
- The purchase should have been made a few days earlier at the correct pivot price.
- Lessons Learned:
- Following strict trading rules and CAN SLIM principles helps maintain profitable trades.
- Emphasizes the importance of the overall market direction being upward.
- Position ROI (%): 11.15
- Position ROI (Portfolio, %): 0.99
- Position Open Time (Trading Days): 47
- Position Open Time (Days): 71
Concluding Thoughts: The Synergy of Calculation and Trading
This trade not only yielded a profitable outcome but also provided valuable insights into the importance of discipline, strategic planning, and continuous improvement. As traders with a penchant for calculated approaches, we bring a unique perspective to the analysis and execution of trades, leveraging our skills in problem-solving and systematic thinking to navigate the complexities of the financial markets. The journey of this COR trade exemplifies how a calculated mindset can lead to success in trading, encouraging a disciplined, strategic, and reflective approach to every trade. Let’s continue to master the market, one calculated trade at a time.
