Lessons from the past regarding Position Trade

Some of you may wonder why I’m so stubborn on my $AMRN trade and have chosen to sit through an ugly downtrend instead of abiding by my own discipline of cutting my loss and buying them back cheap.

Well, there is a reason why I call this a “position trade” from the get go.  Remember, I made that decision at the time I decided to load up (averaging up) when I was still in-the-money on the trade.

From the past, I had made similar calls to some of the stocks I believed to be “game-changer” or “visionary” but without the kind of conviction I’ve right now with $AMRN; thus, I loaded up BIG but sold too soon and missed the whole “game-changer” and “visionary” uptrend because I was either too busy or waiting for a retracement that I forgot to follow-through.  So, this time, I said to myself, “I’m not going to make the same mistake with $AMRN.”

Below were the trades I left quite some money on the table:

1) Loaded up on $SNFT (before they changed their name to $NUAN) because I believed their voice recognition software was a key component of technology trend at the time.  My average price was around $3.xx and price gyrating between $2.xx and $7.xx for a long long time and it began to wear me out.  Finally price went back up to high $7 and I threw in the towel by selling all my shares at mid-$7 because I didn’t want to go through the pain of watching it falling back below $7 which I had witnessed so many times.  Price then proceeded to head higher after I sold.  I was too “yellow belly” to buy back at $8 because I didn’t want to give back my gain after a long-period of frustration.  $NUAN is now trading at $20.00.

2) Loaded up on $LNG when it was trading at $3.xx.  At the time, I believed in this stock and its fundamental so much that I literally had a large stake on this one.  I had about 13% of my portfolio betting on this stock and I told myself I would hold this one long-term.  Price shot up to $6 and promptly fell back to $4.  The volatility was insane!  Instead of sticking to my conviction, I sold out when price went back to $5.00 for a decent profit.  While price continued to spike up and down in great speed either way, I lost my appetite after swing-trading $LNG for some quick profit here and there.   $LNG is now trading at $26.00.

3) Loaded up on $BIDU when it was trading at $110.00 before the split.  It was during one of those anti-BIDU sentiment and $BIDU dropped in price from high $300.00 to low $100.00.  Because my conviction wasn’t there, I sold at $130.00 and forgot about the stock.  $BIDU is now trading at $86.12 after split (pre-split would be $861.20).

4) Loaded up on $AMRN when it was trading at $3.xx.  After it went to $7.00, I got nervous and sold it for profit.  Since then, I began to swing trading it for profit.  Then one day, it so happened I did not have any position at the time, $AMRN gapped up to $16.xx and headed to $19.xx before heading back down.  I knew I would have sold it b/w $16.xx and $19.xx if I had held my full-size position.

Now, if I don’t learn from the lessons above, it will be all for naught.  So I told myself that, this time, I’m not going to let this volatility on $AMRN get the best of me.  Therefore, I’m holding this one through the end.  The one thing that allows me to hold this one through thick and thin is that I did not average down along the way.  I set my worst case loss scenario at my original investment (I doubt I will lose the whole thing since they do have a patent on pure EPA (icosapent ethyl); thus, I’m not faded by current $AMRN downdraft.

One more thing, because I made money back then with $AMRN when I loaded up with more shares than I’m holding now, this drawdown is simply my paper loss against my previous realized gain.  This fact does ease my mind in a way giving the current price of $AMRN is in a deep malaise.

Remember folk, this is strictly for position trade, I hold no such tolerance and conviction when it comes to my swing trades.  Swing trade is strictly for profit-taking when you see it.  Since the position size is much smaller, missing the runners here and there is part of the game.

My 2 cents.


Categories: AMRN

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