This morning I came in long a small overnight position in QCOM. Chop Spencer! But based on several factors I was looking for another sizable up leg. I bought additional shares right on the Open when a seller at 42.50 was lifted. QCOM quickly traded up another point. I took my profits when the buying pattern changed in the 43.70s.
As QCOM began to pullback I was looking for spots to get long as I thought the initial opening drive was foreshadowing another large up move later that day. I told ALJ that if QCOM got back to 43 I would reload. Any large players who were interested in putting on long positions in QCOM would most likely look to buy on the first pullback to a whole number. These old school traders still think in fractions so they typically buy at the whole, .75, .50, and .25.
QCOM pulled back to 43 and stopped on a dime. It then rallied back 43.57. I was in the driver’s seat. I had a very large position from an average price of 43.11 and was prepared to hold the entire position for another significant up move. Oh, but the best laid plans….
QCOM began to reverse and I hit out of my position below 43.30. As it traded lower I continued to look for spots to get long as I still believed it would trade significantly higher that day. I made the mistake of putting on large size at unimportant prices and slowly but surely continued to give back my gains from the initial two trades I had made.
Eventually QCOM breached 43 and I hit out of a large position. At this point I had given back about 65% of the profits I had made in the first 30 minutes of the trading day. This was far too much money to give back in a stock as liquid as QCOM.
Note to self: If you are up a lot of money by 10:00AM do not give back more than 25% of your profits. This will make a huge difference at the end of the month!
7 Comments on “The Importance Of Not Relinquishing Gains”
Hi Steve:
It must have been a nice chop from the overnight position. QCOM was consolidating for the last month above 38.5 and then 40.0.
Was the consolidation the reasoning for taking the overnight position, would you have held the stock like a swing trade in case it did not gap up today? I suppose the exit would be below 40.0.
Regards,
Tapetrader
Hi Steve:
It must have been a nice chop from the overnight position. QCOM was consolidating for the last month above 38.5 and then 40.0.
Was the consolidation the reasoning for taking the overnight position, would you have held the stock like a swing trade in case it did not gap up today? I suppose the exit would be below 40.0.
Regards,
Tapetrader
Tapetrader,
It caught my attention the other day when it broke above 40. I bought the following day when it pulled back to the 39.80s. My plan was to hit out below 39.75 or buy more on a break above 40.80 for a possible move to 42. That all changed with the large gap today.
Steve
Steve,
The timing and topic of this post truly made my day. Thanks for the great insights.
Steve,
The timing and topic of this post truly made my day. Thanks for the great insights.
Steve,
Ah I see, I did not know that you held Qcom for 4 days before it gapped up :).
I have been working on distinguishing stocks that produce only one move versus stocks that will produce multiple uplegs. Sometimes traders can get psychologically rewarded for a big gain and become biased toward a single direction with much higher expectations. I guess its another reason psychology is so important to trading.
Tapetrader
Steve,
Ah I see, I did not know that you held Qcom for 4 days before it gapped up :).
I have been working on distinguishing stocks that produce only one move versus stocks that will produce multiple uplegs. Sometimes traders can get psychologically rewarded for a big gain and become biased toward a single direction with much higher expectations. I guess its another reason psychology is so important to trading.
Tapetrader