JPM Let's look at the trade last week that we talked about. If you entered the trade as described and took a little more after 44.70 you made about 1.5 to 2 points. JPM topped at about 46.00 and after earnings JPM just couldn't find a higher high the next day. This was your cue to exit the trade and capture 2 points. Very nice for a one week period.
What made this trade good? Entry Points! We picked a nice conservative entry. Purchased small and waited for confirmation to add to the position. By planning the Entry Point you have defined your risk (support), made a thesis or plan and did not blitz and buy to big until you were proven correct. All of these items are important in purchasing your stocks with lower stress and accuracy.
We did have a stop loss at 42.50 but that was in place just incase we were wrong in the very beginning or for a massive quick sell off. It should have never been hit and you should have exited the trade for a profit. Even If you waited until yesterday during the sell off, which obviously told you market conditions have changed you should have made a small profit.
LULU did not have follow through the second day if you did purchase. Hope fully you did purchase small if you purchased at all. Stop loss was hit or you exited when you did not see follow though this was the smart thing to do. The action the day of the break out was great but late in the day LULU sold off and did not close at the high of the day. That's a red checkmark! The next day it was sold off slightly, Usually after a breakout, the stock will continue upward for 3 to 4 days. If it dosen't you need to be suspect. So to negatives happened, 1.) LULU dosen't close at the high of the day and day 2 close was below day 1 and pulled back. That's your sign that you were wrong and close out of the position.