Sunday, July 27, 2014

VRNS: Stupid is as Stupid does but dumb money prevails

I violated my stop.  Not a good Idea.  I was rewarded with a reversal a day later: 


 I note my mistake so I make a habit of avoiding this type of trade and don't just see a gain in the trade column.

In retrospect my stop was too tight. (I did not exceed my 2% rule, even with the broken stop).  My initial trade of VRNS identified 20 as the stop.  I should have used that same stop instead of 21.

So why did I stay in?  Low volume pull back, wide spreads and I rationalized that the VRNS was trading at a market cap, which IBM offered to buy the entire company several years ago.  Stochastics are under 6.00 so its very overversold. Others stocks in the sector were bouncing, etc..

The point is I can justify an number of reasons to stay in a stock.  More often than not I will lose money by pulling this type of stunt.  So 50 push ups as punishment for not sticking to the trading plan.

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