Tuesday, July 27, 2010

VXX model and why loss?

One cannot use the 30 day average trend for buying and selling this stock. I should have put a limit on the sell side at atleast the cost price so the declining stock will not cause further losses, when the expectation go the other way. Hmmm

One should never loose the original capital and one has to do whatever it takes to do that. Taking a loss on the capital leads to further risk taking in the future. This can cause further losses. Hence when there is uncertainty about the exception of the market movement one has to keep a sell price limit at atleast the cost price or take the profits when they exists.

I had a profit of 600$ but instead waited till it went into the red zone. At least a sell limit at cost price would have saved me from th losses. Hmmmm

When trend moves against you, always keep a sell price at cost price. And get out of the market. This has not happened.

Now is the time to patiently wait for another downturn. Selling is a loss when it is a lossing individual stock but in this case VXX is an index and hence there is more security and expectation of moving back when market loses confidence.

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