QLD - Second Mouse Gets the Cheese

One phenomona Jeff Cooper, who wrote the recommended Hit and Run Trading books, talks about when trading, is the second mouse getting the cheese. Here’s an example, and why it pays to hop right back on a trade if you get stopped out.

I bought my first lot of QLD at 87.30 on the buy trigger 8th candlestick. I then doubled my shares on the break of the 30-minute intraday high. QLD stalled. I dumped the shares when the stock wasn’t continuing it’s momentum. Sure enough, it pulled back, and gave another buy signal. If I hadn’t doubled down, my first stop which was under the 7th candlestick would not have been hit. The second thrust higher was successful. Second mouse got the cheese.

Now this trade looks fairly easy writing about it in hindsight. Just set a buy-stop to triggeron that second thrust. You know I even thought about doing that, but didn’t. Failure to pull the trigger zapped me, and I watched this ETF continue without me. As I’ve written before, failure to buy a stock, or exiting too early, are common emotional challenges of the trader. One’s I will need to work on still obviously.