Trade Exit – FOSL, Fossil
Last week I encountered a rare stop loss exit on Fossil (FOSL) where a missed earnings announcement had a dramatic negative affect on it’s stock price, gapping down over 15% overnight on next day’s open.
Got caught on the downside as I held the stock long due to the fundamental strength of the business and hence held it for a medium term trade. Was pretty much stopped out on open as my conditional stop loss was triggered and trade exited automatically.
Shows how no matter how prepared and confident you are of a trade going well, out of the blue can bring unexpected bad news. Therefore it is vital to always be prepared for the worse and not allow any one trade to ever hurt your account. My total position size on this trade was a mere 0.5% of the account, with maximum expected risk on this trade of 0.0375%, and even with gapping doubling that, it is a mere blip on the overall portfolio which will easily be made up by other trades that go right.
I have since jumped back into this trade a few days ago and will see how we go. My systems and position sizing plan eliminates any fear of jumping back in straight after a loss.
FOSL, Fossil Stock Exit @ $84.22 on 18 Feb 2015 (Blue Shade).
Stock Original entry @ $100.95 on 22 Jan 2015 (Green Shade).
Total Return on Investment (ROI) of -16.57% and -224.04% Annualised.
Duration: 27 days.
Reason for exit;
Conditional stop loss triggered due to negative earnings announcement and stock exited automatically.
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