This edition of Confessional Booth with ForexDiva isn't going to be as juicy as it usually is. I'm trying not to give myself a hard time with my recent CENX sell. The thing is I got out of the trade due to an emotional situation and not based on any fundamental or technical reasoning. There's now a head and shoulders formation on the 3-month timeframe. The question is will it get back to $10 or $11 again? $11 looks more likely, but it could just as well break to the topside since many head and shoulders patterns fail - at least when it comes to forex. I'm now going to observe this H&S on CENX to see if the prevalence of H&S failures also exists in the equities market. Options chains analysis on CENX also points to the $10 or $11 level as critical levels. So perhaps I shouldn't have to regret that I sold.
But what happened to BAC today? It managed another +2.12% move up. I'm looking for some more opportunities to buy up the highly undervalued financial sector. It all depends on whether I stay in Belgium or not. Yes, I'm still negotiating!
-0.66% on the SBA
+0.32% on the Roth IRA
BAC is now in my SBA. Yet, due to how small that position is, even with the nice move up, it doesn't make a huge difference to the bottom line.
I now realise how much I need to risk and how much I need to potentially make in order to get a good ROI. Once you identify some price levels you're comfortable with, you can basically identify several different stocks trading in that range and just get into one or two positions at precisely the right moment. That gives you a consistent trading system that's slightly less emotional and much more profitable.
For instance, if you like stocks ranging from $10 to $12 and just look at only those price levels and find investment opportunities that match a potential gain of 25 to 50%, you've got a predefined risk:reward profile that's already built into your trading system.
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