TBLT A Lesson Learned

19 авг. 2021 г.

Last week around this same time I posted an idea on TBLT asking how traders get trapped in these gaps . I had just started to study gaps so this actually played out perfectly and answered my own question.

I wanted to know how traders get trapped in these situations where you go into the weekend confident in your decision, only to watch everything come crashing down on you Monday morning. The way this played out couldn't have been more perfect.

TBLT is considered a penny stock for those of you who are also new to the market, and not totally hip on your terminology yet. Any stock share with a price of $10.00 and below is considered by most professional traders to fall under the penny stock designation.

Penny stocks are considered extremely volatile in the trading community for many reasons; one example being that the low Market Cap of these companies, and the low share price make these prime candidates for pump and dump schemes. Penny Stocks are also at higher risk of having trading halted by regulators during an active Market session. This can lead to substantial losses. There are plenty of other reasons that make them a high risk, but these two are most important in my opinion.

Now that you have the back story, I'll make this part short and sweet. What went wrong was the perfect storm of me dabbling in an extremely volatile asset class, not following my trading plan by setting a stop loss to mitigate my risk if things went in the opposite direction; which is exactly what happened, and buying so close to an Earnings report that ended up being less than stellar. ( That last part about the earnings report was actually a surprise to me. They are a small company, but they had great numbers with their online sales, and the tools are decent. I actually use some of them ). Anyway, it's all relevant to what led me to enter the trade, so that's why it's here.

I used multi timeframe analysis of the Daily & 1 hour time frames for this particular trade. I entered using the hourly candlestick pattern and bought on the open of the one hour candle.

I apologize for the unprofessional graphics, but I'm limited to an Android phone for all of this. I will see if I can edit this on a PC when I get the chance so I can add the other graphic. I have the Daily & 1 hour charts marked up, but I could only capture screenshots due to being limited to my mobile device.

Back to business :

As the old saying goes ; A picture tells a thousand words. My Swing Trade has now turned into a longer term hold tying up capital and leaving me in the red for the time being. I hope this helps other new traders understand that technical analysis is an extremely deep subject, and that sticking to your plan is of the utmost importance. If I had done this properly , I could be buying the dip, or moving on to another trade instead of holding a bag.

Leave a comment below, and let me know what you think about my explanation. Let me know if this has ever happened to you? Thankfully I did stick to only investing a small percentage of capital per trade, so it's not all bad news.

*Not financial advice. For educational and entertainment purposes only.