Another trade, another lesson learned.
Again, the best way to explain is by means of telling the story as it happened. Thursday morning 12 Feb 2015 Woolies (WHL) released their Unaudited Results on SENS. I won’t go into too much detail, so long story short, the results looked very good. This now gave me a few good reasons to buy the stock. Firstly there was the price formation on the chart. It had come down nicely and had been testing support for a few days. It hadn’t given a buy signal yet, but you could get the sense that the buy signal was coming. Secondly and according to the results that were released before the market opened, they’d done a good job with their Australian acquisition and revenue was looking to steadily increase in the years to come. So the time had come to pull the trigger.
During the opening auction, I bid for stock slightly higher than the previous day’s close (Wednesday). The stock came out of auction a lot higher than the previous day’s close and after some slight indecision, shot up the page and started a fierce rally. I didn’t move my bid. I don’t chase trades. I’d figured that the market always gives a second chance, which it does… most of the time. In this case though, I was resolute that I would stick to the rules and not chase. I was adamant that I would get my second chance. I didn’t.
Friday morning came, and in accordance with my rules, I bid for the stock again. Again it opened higher, had a brief moment of hesitation (offering me a chance to lift the stock), and again I didn’t move my bid higher, and again the stock shot up the page.
I had missed a R10 move on a R80 stock. That is a huge move!
So what did I learn? Well, first I should give credit to the person who taught me the lesson, for this one I didn’t figure out myself, but rather had it pointed out to me. @Trader1137 on twitter said this to me:
Trader1137 @Trader1137 -@TraderPetri I have a simple plan. If the share is up on the day ... take the offer. If the change on the day is minus, sit on the bid.
What hurts the most here is that on Friday I had the opportunity to do just that, but apparently I am a slow and stubborn learner.
It is fairly obvious if you think about it, although I never really have. Granted that although the circumstances in which this would be applicable are rarely prevalent, they will from time to time crop up. And thus, my lesson for the past week is that sometimes you have to chase the winner, just a little bit.
@TraderPetri
13 Feb 2015
