Today I took a loss in GOL. I’ve traded this name in the past with success and failure. This trades failure hurt a little more though because I let it last.
The trade lost me 5% of my position size, 1% of my portfolio size. The nominal risk reward was one that I would take again, and likely one that may still work in time. I believe I just got wore out by GOL.
Why does this happen to me?
I might not have the complete answer yet, as I have future trades to make, lessons to learn and past failures to still analyze. But one particular thing did pop into my head that shed light on many.
-The position in GOL was not my primary portfolio position-
It was a trade initiated off an alert set at a retracement level after profits were taken near the recent high of 13 in GOL.
This alert sounds more like an invitation to investigate than to initiate a trade and in fact this is part of why I believe I got worn out.
I do not give my secondary positions as much attention as my primary positions- and I should.
When I make a trade like the one in GOL I try to set my alert target entry points at places where price would be at an extreme. But at the same time, I need to do a better job of evaluating the price action at this extreme.
I should have never been in the GOL trade after Wednesday 7/13/11. The close was below 11.72 a key level of support and the prior breakout level that I was basing my retracement off of.
I set a loose stop because my position size was small and because the markets were swinging large magnitude moves.
I should have respected the initial analysis for the alert, but spent more time investigating the price motion at and after its breakdown from 11.72.
I need to become more accepting that my timing will not always be precise and manage risk better knowing this.
I need to emphasize the importance of the thoroughness of my primary positions analysis and heed its rules even when taking smaller secondary positions.
I would rather miss the start of a move than be worn out by miss timing it, as I have here, and later see my projections take hold.
This could very well be happening in GOL right now, but I will wait for 11.72 to show significance again.