Sunday, March 4, 2012

REE: Update

REE sold off nearly 8%.    I've had a long standing buy to cover order at 5.36 for 1/3 of my position.   5.36 happened to be the low of the day earning me a 100% grade on the exit. Woo hoo!   This looks like a sick dog, but I wouldn't be surprised to see a relief rally because the sell of was so severe.  Anyway by taking profits, this will let me ride this much lower.  I'm triggering low 4s.

Triage:  In retrospect, this was a bad trade with many broken rules.  I fairness to myself, however, I took the position before I created the rules and before I had started the impulse system.   It's evident that I initiated this trade way too early  into a strong wave of buying.  The impulse system would have prevented me from taking this trade when I did.   Because I was only short only 200 shares I was able to ride out the position.  Also, I felt comfortable with the fundamental reasons for this short as I had researched it extensively.     

I entered this after a large move by selling ITM calls (short shares were scarce).    There was no MACD divergence at the time however,   Had I waited until that occurred I would have gotten short at least $1.50 higher.   My second entry was nearly 1.00 higher.  So I averaged into a losing position,  usually not a great strategy. 

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