Today is Deepavali and I have some free time. I'm going to go over a trade recap of a failed trade I did yesterday.[鬼脸]
Many people experience greed when it comes to profit-taking. We often aim to guess the top which is impossible to guess correctly every single time. I am no exception. [丢脸] The stock I was trading was $Lucid Group Inc(LCID)$, which was mentioned in my weekly trade ideas.
On Tuesday, this stock fell beyond 35.48, reaching 33.02 as the LOD. I didn't take any trades on this stock that day but it caught my attention.
I determined the daily pivot to watch out for at around 34, as that was the most active traded price for Tuesday.
On Wednesday, I was watching this closely and entered a trade.
As you can see, the price breakout of the premarket trendline and above the daily pivot I determined. It was bullish but I didn't rush to enter a trade as it was FOMC day. Later on that day, I noticed how it had a strong bounce at the 50% fib retracement of 30min opening range. This is when I entered the trade. I bought call options when the price was around 35.76. As I expected, the stock gain momentum and rallied higher breaking out of 30min opening range. It went towards 138.20% fib level before coming to a pause. For more information about premarket trendline and 30min opening range, read:
Everything was perfect, yet I called this a failed trade. Why?
This is because I didn't manage to secure my profits![惊讶] Judging how it bounced strongly at 50% retracement, my bias was that it will reach 161.80% fib level without a doubt. However, this did not happen.[摊手] The call options I bought saw 70%+ gains, yet I was too greedy to secure the profits.[惊吓]
The price bounced off the first 30min high and attempted to test the 138.20% level, in which there was strong rejection. That was when I realised the price might not go any higher for that day and decided to sell my position at only +10% gains.[黑眼圈]
I did not walk the talk
If you have been following me, you should know that I always preach to secure profits, but this time greed got the better of me. Despite +10% gains, I consider this a failed trade simply because I did not abide by my own rules, which can be fatal when it comes to options trading. I'm sharing this trade to let new traders know that trading is not an easy get-rich-quick method. All of us make mistakes and I feel that it is necessary to acknowledge our mistakes and learn from them. This is how we grow to become better traders. [胜利]
Lesson learned today:
Take the profits and don't be greedy.[可爱] When you are happy and took a screenshot of your profits to share with your friends, it's probably time to sell![笑哭]
I wish you success in your trading journey![保佑]
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