Nektar Therapeutics (NKTR)
NKTR was a lower probability (65%) trade with a huge profit potential, and at the close of the week it sure looks doomed….However, no trade is done until it’s exited, so I will force this to trigger stop losses below the $16 per share area.
I'll never forget an iconic trade I took in Procter and Gamble early on in my career. I entered the trade, put the stops below the lows, and immediately enjoyed a rally up for a 6% gain. The market then topped out, and began to fall off badly.
I lost all of my open profits, then started to take some heat as the price broke down below my break even level... The bears dominated that stock all the way back down to the lows.
I remember feeling so terrible, as it seemed inevitable that this trade was going to stop out for a loss and I was constantly recriminating myself as I second guessed my choice not to take profits “when I had them”.
As you probably already suspect, there was no real evidence for me to make it exit decision on, and in fact all the signs pointed for a long sustained rally to the upside, so I did the right thing. Price came within 3 pennies of my stop loss level, reversed and began to rally like a rocket launched at the moon.
It ended up delivering a strong double digit gain for me, and has always acted as an iconic lesson that I recall anytime I'm feeling an emotional pull towards taking an impulsive action which is not based on the odds or any other hard data.
I can't tell you how many times the trades that I felt were slam dunks failed, and the trades that I was sure were going to stop out and cost me money that reversed and ended up hitting my profit targets.
In the beginning, you connect your ego and self worth to the success or failure of your trades, and this is emotional suicide as it create tremendous psychological pressure which leads to impulsive and emotional actions. Once you can become truly detached and literally care nothing about whether an individual trade succeeds or fails, because you are so hyper focused on the long term results that you intend to achieve…Magic happens and everything starts to produce in a cyclical and consistent manner.
These are just the sorts of lessons that I find have the most impact on traders results, once they master the basic technical skills of our proprietary market forecasting process which we teach at Market Forecasting Academy. Like so many things in life, trade management is one of those “80/20” things, where 80% of your profitability and consistency comes from your consistency in execution, whereas you probably spent 80% of your focus on the technical aspects of the tactics and strategies which in reality only produce 20% of your true profitability.