Home > Education > How to deal with sudden price reversals ?

How to deal with sudden price reversals ?

Tuesday, October 27, 2009 Leave a comment Go to comments

Yesterday was particularly challenging as a stock like Punj LLoyd in which I had some trading positions suddenly reversed. The stock had  a gap down opening and slid 17% by the time it closed!

What can one do if one is faced with a situation like that?

I’d say- just get out! And that’s what I did . Taking a loss is never easy but that’s how this game is played.

One might ask- what if the stock bounces up again? My answer to that would be – what if the stock slides even more?

The future is not known, so by cutting my loss I can think clearly and focus on making the next strategy. I might take countertrend trades at lower levels or wait for enother buy signal to emerge before I jump again.

On the other hand, by leaving my position in the hands of the market, I’d be feeling more pain.

Markets are in a corrective phase and it will force you to make some hard choices!

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Categories: Education
  1. freakoutgenius
    Tuesday, October 27, 2009 at 3:07 pm

    hi,
    I watch your comments with a lot of interest.
    Could you pl suggest a good entry point for this stock – once the current bloodbath is over ?

    Thanks a lot 🙂

    • Wednesday, October 28, 2009 at 7:41 am

      Punj might be a decent pick around 170 if market stabilizes around 4500-4600 levels.

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