Friday, August 1, 2014

Closed: HCLP. Many bad decisions One Big Gain.

MY HLCP trade comes to an end as my stop is hit.  This was a big gain so here's the re-cap.

Entry 1:  $39.9  (Feb 18)
Entry 2:  $38.32 (Feb 21)
Entry 3: $37.55 (Feb. 21)

The breakout on the initial entry failed.  Quite frankly, it failed in epic fashion.  I bought small because it was at a high end of the range.  As it pulled back, I added.   It then rallied--and failed again. 

Exit 1: Sold off 40.65 (April 7).  At this point, HCLP had rallied to about a high of 42.50.  And then sold off.  The sell offs were relatively quick.  I'm not sure why I made the decision to cut back on the position here, but I did and I sold off 1/3 of the position. I'm sure this was more of a "fear" of losing profits decision than a profit target.  That being said It worked out and  I bought back that position 3 days  later at $39.43.  

Entry 4: $39.43.  
After selling 20pts higher its easy to just simply think you made a great decision at the time.  But the truth is I didn't.  HCLP started to sell off... I bought... it went down more on huge volume.  The announcement was that they had announced a secondary offering. There is nothing that looks good on this chart. Perhaps if I were playing a mean reversion strategy some triggers would go off on huge. But I can't say I was.   At this point, all of my position was underwater.

Things Change.
Up to this point, HCLP had been a disappointing trade. Over the next two days. A couple of reversal candles formed:

This would have been a good time to buy.  Two reversal @ 36 would strongly suggest the end of the downward pressure.  A stock could be placed for the break of 36, which would presented reasonable R/R.

Then the fun begins.

I was on vacation that week in June when it sold off but was pleased after it compressed and headed higher by week's end.  I didn't not have a particularly well formed exit strategy. So I decided to ride it out. 

EXIT 2, position closed.

HCLP then topped out and sold off hard.  Sure I knew HCLP was over extended but I was hopeful it would compress and the selling continued.  I had set a volatility stop  3.5 X 21 ATR, which had tracked the trend very well.. That stop was violated and I sold at $58.92 today.

Summary: Avg. Entry 38.88 $    Exit. 58.92   (+ 20.04 51.5%)  Dividends (1.10)  Exit 1 (+1.02  (3.07/3)  Total points. 21.58  ($57.80 % Return).*

*Correction.  HCLP went Ex. Div. yesterday. So I'll picked up another .58 in dividends, which will be paid later this month.  I added this anticipated dividend payment into the total return.

In speculation, emotions are always in the backdrop.  There's fear, there's greed, pride, embarrassment, loss and regret. 

Here, I acknowledge I regret selling at this point.  I wanted the LT capital gain.  I'm fearful that HCLP will bounce and rally to new highs.  The fundamentals are strong. The industry is going to rally expand or it could implode.  Much could be priced in, new quarries could go on line prices could collapse. I don't know. No matter how informed I may be, I can only trade price.

My ultimate success as a trader will depend on being able to get beyond those emotions or realize how they impact my decision making process. 

 After I sold, this today. I felt the need to engage in some reckless day trades in MBLY-- some new IPO that I'm not sure what it even does.  I made money on the trades, but what the hell was I thinking?  I think it was regret.  I probably had married my HCLP  position more than I would like to admit.  And when I got out my subconscious must have felt the void.  I have much work still to do.

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