This article shows that time after time even if the setup is right the stock might fall rapidly immediately after buying. After reading this you know exactly what to do and, more importantly, what frame of mind to have for this kind of event.
Chasing unicorn stocks is akin to searching for that mythical creature in an enchanted forest; it’s thrilling, often elusive, and sometimes, you might just end up chasing shadows. It’s the financial equivalent of trying to catch Eleanor in “Gone in 60 Seconds” – that dream car that’s just beyond your grasp, pushing you to the edge of your capabilities. I’ve had my fair share of Eleanors in the stock market, and here’s the saga of one such pursuit, filled with highs, lows, and invaluable lessons.
The Hunt Begins
Setting Off into the Unknown
- The Quest: On a seemingly ordinary day, the 8th of March, 2024, I embarked on a journey with a stock priced at $61.80. With the wind of a confirmed uptrend at my back and the sails of high RS rating catching every bit of momentum, it seemed like smooth sailing ahead.
- Laying Down the Nets: My strategy was simple; set a stop loss at $59.89, aim for a profit target of $74.16, and let the market winds do the rest. The stock’s recovery on strong volume was like a siren’s call, luring me in with promises of grandeur.
The Mirage of Perfection
- Reality’s Clutch: Despite the initial optimism, this venture was far from ideal. The stock remained stubbornly within its base, reminiscent of a mirage that fades upon closer inspection. It served as a stark reminder of the market’s volatility and the seductive danger of potential rewards.
The Escape
Eleanor Dodges Again
- The Slip: Just as I thought I had my hands on the wheel, the price dipped to $59.88, triggering my stop loss. Despite the market’s continued uptrend and an unchanged RS rating, my Eleanor had vanished into thin air once again.
- Reflections on the Chase: This stock was my unicorn, always a step ahead, teaching me lessons in humility and the unpredictable nature of the market.
Lessons from the Forest
Nuggets of Wisdom
- The Silver Linings:
- I entered the fray after a bullish signal, adhering to my trading discipline even in the face of defeat.
- The mistake was clear; I ventured too far, chasing a price far removed from its foundational averages, a classic folly in the tale of pursuit.
- The epiphany came starkly; in the realm of volatile yet promising investments, one must sometimes hold a smaller banner, perhaps adjusting the battle strategy around the stock’s movements, considering the wisdom of a more flexible stop-loss strategy.
The Moral of the Story
- Reflecting on the Hunt:
- My return on this quest was -4.70%, a small dent in my portfolio armor of -0.26%.
- Though the chase was brief, the lessons it imparted were eternal, engraved in the annals of my trading journey.
details at a glance
Opening
- Underlying: BHVN
- Date: 8 Mar 2024
- Underlying Price: $61.80
- Stop Loss: $59.89
- Profit Target: $74.16
- Market Outlook: Confirmed uptrend
- RS Rating: 99
- RS Line Trend: Upwards
- Industry Rank: 6 out of 197
- Volume U/D Ratio: 1.1
- Institutional Ownership Trend: Upwards
- Position Risk, %: 3.07%
- Position Risk to NL, %: 0.17%
- Potential Profit (Position), %: 19.84%
- Risk to Reward Ratio: 0.15
- Position Size, %: 5.57%
- Reason for Opening Trade: I took the position because the price is recovering with strong volume.
- Was it an Ideal Buy? No. The price was not coming out of the base.
- Remarks: Volatile but attractive stock, leading industry.
Closing
- Date: 8 Mar 2024
- Price (Close): $59.88
- Market Outlook: Confirmed uptrend
- RS Rating at Close: 99
- RS Change: 0
- Closing Remarks: This stock seems to be my unicorn. It has stopped me out more often than not.
Results
- What Went Well?: I bought it after a strong up day. When the stock price triggered the stop-loss, the position was closed. I stuck to my trading rules and sold when there was time for it.
- Cause of Error / Improve: When bought, the price of the stock was extended – it was far above all of the key moving averages.
- Lessons Learned: In these kinds of events (stocks that are volatile but have strong upside potential), I maybe should have a strategy for holding a minor position. Even though, somewhere the stop-losses have to be used as well. Maybe below SMA 50?
- Position ROI, %: -4.70%
- Position ROI (Portfolio), %: -0.26%
- Position Open Time (Trading Days): 0
- Position Open Time (Days): 0
The Parting of Ways
Learning to Let Go
In our odyssey for the market’s unicorns, it’s easy to become ensnared by the allure of what could be, forgetting the sage advice of letting go. The market, much like the mythical Eleanor, teaches us the virtues of humility and adaptability, urging us to refine our strategies and embrace the essence of disciplined trading.
The Next Chapter Awaits
As we venture forth, let’s carry with us the knowledge that the pursuit itself is a journey of discovery and growth, not merely a quest for financial gain. When next you spot your Eleanor amidst the labyrinth of the market, approach with the wisdom of experience, armed with strategy and a keen sense of adventure. After all, the true treasure lies not in the capture but in the hunt.
