Read this and you will know exactly what to do when the stock in your portfolio starts losing its value. This means that it is practically impossible to lose and you gain a ton of confidence.
Navigating the world of stock investments can sometimes feel like trying to solve a Rubik’s Cube in the dark—just when you think you’ve got it, something slips. But let’s not complicate things. There’s a simple truth that we all need to remember: when the stocks in your portfolio are rising, your account size swells like my belly after Thanksgiving dinner. And when they fall? Yep, your account size shrinks faster than my enthusiasm for a diet on January 2nd.
Opening Act
Let’s dive into a recent adventure I had with AMD stock, shall we? Picture this: it’s February 29, 2024, a leap year day, which should’ve been my first clue to expect the unexpected.
- Date of Infamy: 29 Feb 2024
- Opening Price: $185.84, not too shabby, right?
- My Plan: Buy low, sell high (a strategy as old as time, yet surprisingly difficult to execute).
- Stop Loss: Set at $176.21, because even I know not to let a bad day ruin my month.
- Profit Target: Dreaming of $223.00.
I made this move because AMD was acting like the cool kid at the party, surging with volume and energy. Despite it not being the ideal setup (it was more of a leap of faith than a calculated move), I went for it. My reasoning? It was showing all the signs of a stock ready to take off.
The Plot Twist
Fast forward to March 8, 2024. The market mood was still upbeat, but AMD decided to throw a curveball.
- Closing Scene: March 8, 2024
- Final Price: $207.28—a gain, but also the end of my little escapade.
- Market Mood: Still upbeat, but my stock had more mood swings than a teenager.
Despite the volatility and getting stopped out, I patted myself on the back for a job well done. The timing was almost impeccable, thanks to an alert I had set. It felt like catching a perfect wave.
Lessons Learned
Now, for the golden nuggets of wisdom:
- The Win: I bought in at a strong moment, riding the wave with precision.
- Room for Improvement: Hindsight is 20/20, and looking back, I should’ve jumped in earlier.
And now, the simple truths:
- When stocks rise, so does your account size. My little AMD adventure boosted my portfolio by 10.41%, adding a nice layer of cushion.
- When they fall, it’s the opposite. This is why we eye the exit door when things get too shaky.
A sharp drop in a day is a red flag. It’s like when you see rain clouds gathering; you might want to pack up your picnic. Consider cutting your losses or at least making your position smaller. It’s about protecting your portfolio from a downpour.
details at a glance
Opening
- Underlying: AMD
- Date: 29 Feb 2024
- Underlying Price: $185.84
- Stop Loss: $176.21
- Profit Target: $223.00
- Market Outlook: Confirmed uptrend
- RS Rating: 96
- RS Line Trend: Upwards
- Industry Rank: 4 / 197
- Volume U/D Ratio: 1.2
- Institutional Ownership Trend: Upwards
- Position Risk, %: 5.15%
- Position Risk to NL, %: 0.45%
- Potential Profit (position), %: 19.89%
- Risk to Reward Ratio: 0.26
- Position Size, %: 8.65%
- Reason for Trade: The stock was in my watchlist and accelerated rapidly with high volume. It wasn’t an ideal buy because the price wasn’t in the buy zone. Influenced by CAN SLIM strategy and EMA 21 performance.
- Remarks: The stock is under accumulation by funds and leads its industry. The risk was larger than usual, and the stock’s rapid price increase on the purchase day led to an upward adjustment of the stop-loss to $176.21 to reduce risk. Consideration for future trades includes focusing on stocks with similar rapid movements, possibly from the ‘Power from pivot’ section.
Closing
- Date: 8 Mar 2024
- Price (Close): $207.28
- Market Outlook: Confirmed uptrend
- RS Rating: 97
- RS Change: +1
- Remarks: The price became volatile on March 8 and was stopped out due to extended price. The buy was made during a strong upday from EMA 21 with heavy volume, indicating very good timing. The decision to sell was influenced by the stock’s price extension.
Results
- What Went Well?: Buying at the strong upday with heavy volume was well-timed thanks to an earlier set price alert. The base’s low depth of 30% suggested a safer buy.
- Cause of Error / Improvement: The purchase could have been better timed on December 7th, 2023, when the stock price broke out from a perfect cup-with-handle base.
- Position ROI, %: 10.41%
- Position ROI (portfolio), %: 0.90%
- Position Open Time (trading days): 6 days
- Position Open Time (days): 8 days
Wrapping It Up
Investing is a journey filled with highs and lows, much like binge-watching your favorite series. You celebrate the wins, learn from the losses, and sometimes, you have to make the tough decision to stop watching a show that’s gone downhill.
Remember, the stocks in your portfolio are more than numbers on a screen. They’re your ticket to financial growth, and managing them wisely is the key to keeping your account in the green. So, next time one of your stocks takes a nosedive, don’t panic. Consider your options, make a plan, and remember the simple truth about rising and falling stocks. After all, it’s all part of the game.
