Talk to most traders and most of them will tell you just how well they are doing and forget to tell you when they have a bad day at the office. Trust me when I say we all have bad trades, its about making sure the good ones out do the bad ones.
I thought today would be a good day to highlight a trade that went bad for me this week and took a drop following a profit warning issued by this company earlier this week.
However, its also a good opportunity to see what can be learnt from the stock to see if anything can be taken from this. So I took a look and I can now see the chart gave me clues when to get out and I only didn’t get out as I didn’t want to take a tiny loss, big mistake!
Then take a look at the last drop, this time it was this week, the time of the major drop. Its quite amazing how the chart seemed to know the profit warning was on its way.
Look at the short term MACD line here again at the same time as the RSI ran into problems the MACD had its own problems. I show a “clear warning” when the MACD failed to break the 0 line. Then just as the MACD has another go to break the 0 line you see how the long term MACD jumps into the picture.
This is the final nail in the coffin, the long term MACD hit too much pressure trying to get over 0 and then failed right at the time of the profit warning.
I think this highlights enough warning and maybe I should of got out of this share earlier, but when? Maybe when it dropped below the 200 day, or maybe as soon as it hit the first fail I highlighted.