One of the important aspects of trading is realizing when you are wrong about a trade and making the appropriate adjustment. In a recent example from last week, I had been stalking VHC for several days as it melted up. I keep such over-extended stocks on a “to fade” list – stocks that I intend on shorting when I feel that the stock is “running out of gas”.
I managed to short VHC and cover for a .80 cent profit as it paused for just one day. Although my approach here was in the context of it just being a trade, I wondered if I was fighting the trend too much. I think so, and a few of you sent me messages that I likely was a bit early on the fade play. I am now long VHC as it shows me a measured move to 27. My latest chart is here.
Being wrong is not a bad thing, it is staying wrong that will cost you.