First Mistake And Apology
I wish I were perfect, but every investor and trader has made a mistake. I apologize to all who did buy Ford because of my thoughts. There are two possibilities for what happened today. The first is that the speculators, the institutions, and the long term investors were all selling because they really do not believe in the stock anymore. If this is true, which it may be because of the Merrill Lynch downgrade, the stock will continue to decrease in price. The second is that only the speculators were selling and then even shorting the stock because they believe it will continue to go down. After they began selling, stop orders, which everyone should always have in, were triggered and the selling continued. If this is actually what happened, there will be value buyers next week that will be buying the stock.
On my other blog, learntoinvest.blogspot.com, I posted a blog titled Diversification. If your portfolio got hurt very badly by Ford today, you need to read it. I did get hurt and lost money today in Ford, but my losses were offset by my gains in ICE. F was down 1.07 (11.77%) while ICE was up 9.72 (15.04%). With an equal amount of money in each stock, the net gain of the day was positive between the two. Every trader and investor, even the best, has losing trades.
Now, what am I going to do with my position? Well, I am a trader. Therefore, I try to get into a stock for a short period of time and get out when I feel it's time. I posted before that around 9.25 was a dangerous area and that you must be cautious. I did not sell my shares or options when it was around that price. That was my mistake. The stock chart is still in a trend and the low of the day did not go below 7.31, the nearest important low. The 50-day moving average is still increasing as is the 200-day moving average. The 50 is close to crossing the 200, which means that the stock price will continue to increase in price if it successfully crosses. If it fails to cross the 200, the stock price will decrease.
We will see if this is a pull back on Monday because of a great overreaction, which I believe is possible, or if it's the end of my losing trade. You must decide when to cut the loser and ride the winner until you feel it's time to cut it too.
Again, I apologize to those of you who lost money based on my analysis. There will be other losing trades as well in the future, but if there are more winners than losers, we're making money! That is my goal!
On my other blog, learntoinvest.blogspot.com, I posted a blog titled Diversification. If your portfolio got hurt very badly by Ford today, you need to read it. I did get hurt and lost money today in Ford, but my losses were offset by my gains in ICE. F was down 1.07 (11.77%) while ICE was up 9.72 (15.04%). With an equal amount of money in each stock, the net gain of the day was positive between the two. Every trader and investor, even the best, has losing trades.
Now, what am I going to do with my position? Well, I am a trader. Therefore, I try to get into a stock for a short period of time and get out when I feel it's time. I posted before that around 9.25 was a dangerous area and that you must be cautious. I did not sell my shares or options when it was around that price. That was my mistake. The stock chart is still in a trend and the low of the day did not go below 7.31, the nearest important low. The 50-day moving average is still increasing as is the 200-day moving average. The 50 is close to crossing the 200, which means that the stock price will continue to increase in price if it successfully crosses. If it fails to cross the 200, the stock price will decrease.
We will see if this is a pull back on Monday because of a great overreaction, which I believe is possible, or if it's the end of my losing trade. You must decide when to cut the loser and ride the winner until you feel it's time to cut it too.
Again, I apologize to those of you who lost money based on my analysis. There will be other losing trades as well in the future, but if there are more winners than losers, we're making money! That is my goal!
posted by Ben Sakhai | 8:11 PM
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