How to repair a losing trade back to health?

 

The above scenario is based on worst case when a stock was purchased at the highest point 0f $0.39

where it started to trade to the downside. This illustration is subjective to interpretation, it takes

guts and years of trading skills to perform the recovery, you are not to average down as the stock 

price goes lower which is what most unskilled traders will do. 

In fact, the best loss is the initial cut loss level that you have set before you enter the market to

buy. 

But If you have overlooked or assumed that you just need to "buy and forget" then you will be 

very sorry soon. 

IN order to reduce the losses, there are steps to be taken to make sure that recovery is possible, you

need to identify that the stock is longer going lower and started to move sideway, as the stock starts

to move up the trend, you make the 1st recovery purchased as shown on 9th April when you see a

bullish Green bar (almost closed near day high), the quantity to buy has to be 3 times higher than the 

initial lots size. Subsequently, as the price move higher, execute the 2nd recovery purchased as shown 

on 6th May at $0.26 with 3 times higher than the initial lots size.

By averaging up the price, you will have a positive outcome as shown below. 

Base on my study, with this strategy, you can reduce the losses significantly and provided you have

the guts, capital and trading skills to recover a losing stock over a period of time.

Personally, initial cut loss is the best loss... and I always traded small lots size in the initial entry. 

The highest risk is always the initial entry where you do not know where the stock will be heading 

even after extensive study of the financial ratios and charting. The market will do what its need to do

and we have no control over it. What we can do is to limit our losses with trading plan.

so if I am wrong in my initial entry, I can still exit with small losses quickly, but if I am right on the

entry, the next buy will be heavy when the price moves higher above the breakeven level and I 

will keep on adding more positions up the trend. With averaging in an uptrend, my average per share is 

still lower than the market price.

In this way, there is no fear to buy high price and hope for higher price as the stock continue to 

rise until it triggers the profit protect line to exit the trade. 

Take example of the current holding of SIA stock.

Refer to the below post on how to start small and finish well..

Start Small and Finish Well

Other ways to recover losses in a trade.

1) If there is stock call or put option (warrants) to buy as a protection insurance.

2) Trade another stock which is trending up or down. Trade in the direction of trend to generate
     profits to cover the losses from the losing trade.

3) To apply what I have shared in this blog, average up when the stock starts to recover. 

You are the master of your own habits and trading techniques, find your own way to resolve the situation back to health. 

Don't sit on it. 

You will be better off doing something with small and calculated steps towards recovering from losses.

Happy Profitable Trading 2020

Welcome 2021 with massive action.

Why I traded SIA and to-date I have continued to add more lots?

 Refer to the blog link below, showed the buying of SIA as its fell and started to recover...

Chartfreely to Singapore Stock: Singapore Airlines Daily Chart Analysis dated 041220 (chartfreely-sg.blogspot.com)

How I decided to take trade is no coincidence, it needed effort to study the market as a whole and understood what could turn out for SIA if the Covid situation can be contained with promising vaccine soon and what the chart can tell you a story if we are moving towards a more positive outcome or never.

Using Moving Average Lines as a guide to build a simple trading profitable system

 

With three moving averages, you can trend trade the stock. 

What you need to know are below:

1) When to enter a trade long or short?

2) When to continue to add lots as price trend higher?

3) When to take partial profits when price trend too far away?

4) When to sell everything and be happy?

5) Scan another potential stock and repeat Step 1 to 4 again.

Hmm...trading is boring boring and routine and routine...

What you need to know for extremely high price and volume bar?

 

Start Small and Finish Well

 

For beginners who just starting to trade. You need to be in the trades in order to learn.

By starting small and accumulate as the price heading up the trend, monitor the cut loss level per entry. 

Hopefully over the time, the 1000 shares will become 10000, 100000 and etcs with confidence built up over the time.

Limit the risk exposure to a dollar value per day when you start out initially, over the time when you

know your win to loss ratio, you can change the game play.

Happy Profitable Trading!

How to do position sizing to limit losses?

 

How to spot and trade a Market Flush? High Probability Trade Setup

Programmed a few calculators over the years...

Oxley Holdings Daily Chart Analysis dated 020120 mid day

Looking at the chart, the stock is going into stage 2 advancing therefore inorder to
trigger a buy, need volume confirmation as well as "whatif" level to cut loss..

This stock is slow moving, therefore need patience to hold for a while....