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Trade Setup Performance Review

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November 16, 2010 – Comments (0) | RELATED TICKERS: FXE , PCXCQ , URBN

For the trade performance review this week, the performance table is bracketed by the breakout that we saw on the 4th on one end, and on the other end is the continual sell-off since then. Hit hardest were the long positions in the portfolio, however, despite their not-so-great current returns, there was a HUGE opportunity to profit in PCX. One rule of thumb I try to abide by is that if a stock profits by more that 3% there is no excuse, to allow that stock to close out at anything less than breakeven. You don't want winners turning into losers, and when I have gains of 3%, I like to get my stop-loss up to break-even as quickly as I can. There is also a good case study with URBN the short setup which today saw a huge breakout on a positive earnings report. The lesson is that you never want to hold a stock through earnings, instead you want to close the position (regardless if it is a profit/loss) prior to it. In this case you would have made about 2.5% on the stock - not much, but a heck of a lot better than the 5% loss by holding it today. There was also profit opportunities in FXE and STRA, but nothing else beyond that. 

For the purposes of this exercise, I took the price at the market open the day I issued the stock pick (which typically is the worst time to be starting a new position in my opinion), and took the share price of the stock, had I held it up until today (unless the stop-loss was triggered before then, at which I would consider the stop-loss to be the exit-price). I have also provided the optimal or the most that could have been made during this trade. With some simple risk management techniques, you should be able to capture a large portion of the profits relative to the optimal gain. I actually did this chart last night at the market close yesterday, so the results are based on those prices.

Below is the performance table in detail.

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