Tuesday, July 24, 2012

Gulf Keystone Petroleum - the end of the road (for this trade)

Today I got an exit signal on Gulf Keystone Petroleum - a combination of the downdraft in the general market and a news release means that this long signal failed. Such is life. In the overall scheme of things a losing trade makes a (small) dent in my capital, but on the positive side it brings me one trade nearer a big winner...

Reading bulletin boards you get the impression that people believe this stock is either going to zero or to £20! One (or both!) of these predictions may be right given enought time, in the same way that there was a book published at the height of the dot.com bubble entitled 'Dow 36,000'.

However, I am a trend following trader, not an investor, and can make better use of my capital by cutting my losses (which I consider to be a cost of doing business) and looking to enter a new position that moves in my favour and generates a profit.

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