It's worth remembering that your mind really doesn't have a mind of its own. And you can go broke by failing to take a gain. How? Simply by hanging onto your losers while tripping up your winners after they've made it through the first turn on their track to unknown price heights.
Let's take a look at one of my winning horses, HPJ. I had a 97% gain on this stock. And the stock lingered a wee bit too long (to my eye) for a follow through in volume. Plus, it was a volatility play, and selling into the volatility break out is part of the strategy. But rather than selling all, I could have done it more deliberately. Here's the chart (sigh!).
So selling was fine (more on that later). Re-buying after it comes back in is part of the strategy too. I did not do that. I passed on not one but two low volume pullbacks.
It is important to differentiate between hindsight bias and transforming 'coulda, woulda, shoulda's' into learning vehicles. What would my learning be from this trip down memory lane? What would I have done differently?
- On first volatility breakout, sell 1/2 position.
- On subsequent pullback, add to the position--now full position.
- On second breakout, I would have sold 1/2 position again, and looked for another entry. As you can see from the chart, that is what some other eyeballs were looking for.
- I would have sold 2 of 3 tranches into the melt up and kept 1/3 position.
Position: Lamenting HPJ - the one that got away and went up, up and away.