The past couple of weeks we experienced a dry spell in the market, the number of premium set-ups were zero to none. I made and lost a couple of thousands in this duration:
Then came the 4th week of March, stocks which I never even heard before came popping in my watchlist. Luckily, they passed my trading checklist to pique my interest:
and my students were able to spot & ride these momentum stocks, as well:
Then on Wednesday, we were reminded by the harsh reality that “Anything can happen”.
This is $LSC, it ran up to +50% during the trading day but in just 15mins during the afternoon session it broke down from a high of 1.45php to 1.00php, that’s almost a 30% drop. This enforces the importance of risk management. You could build a few small gains but the moment you let your guard down and disregard your stop loss, be prepared to let the market take back those gains that you worked to build days, weeks, or even months. I was almost caught up in the disaster, I had a couple of shares in my Timson account that gained around +10% but had to sell at cost to avoid further damage:
I almost got caught in the middle of the disaster in my col account and was just waiting for a few more items in my checklist to get crossed out.
Instances like what happened to $LSC teaches us more lessons than our trading wins do because it leaves scars to traders who were grossly damaged by its sudden selldown. The market is teaching us something during these tough episodes so we can put better countermeasures (position sizing, timing, better reaction to our risk management, etc) when it happens again…because it will. Nevertheless, however down the market is, this week was an evidence that outliers still do appear and that plays never run out. 🙂
That’s it for this month’s narrative. Over and out!