Well....that FSLR trade didn't go as planned. In fact, it's tough to see how it could have been any worse. I buy on Wednesday in anticipation of a breakout to the upside. Two days later, I'm selling at a roughly 15% loss as the price knifed through my stop loss. There happened to be a downgrade issues in the morning with some concerns of warranty issues on the companies products. Next thing you know....down 10% pretty quickly. This price action is why I rarely trade solar stocks. On Monday, you could very well see the price recover 5-10%.
So what did I learn about this trade?
The bad....
1) I should have waited for confirmation of a breakout to the upside instead of anticipating the breakout.
2) I had an opportunity to stop out earlier...as the price action and volume (along with news) during the morning was indicating a bigger move downward.
3) Lost ~15%
The good...
1) I had a plan and stuck with it. This plan prevents me from the potential to loose more than anticipated. Even though the trade lost ~15%, that equates to only 0.6% of my total account.
2) I took the appropriate position size (risk) considering the type of stock and volatility. I only took a partial position.
3) I'm still in the game and live to see a new day.
Even though there are some good takeaways in this story, the goal is still to make money. I don't mind making some mistakes as long as others (along with myself) can learn from them.
~JP
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