A Continuing Lesson About Stops

AmerisourceBergen ABC

How this flag trade is developing continues to intrigue me.  Indeed, is it still to be considered as a flag?

If you recall from the previous post, it was a good looking flag from mid Dec but I was stopped out of the trade on 7 Jan because I had prematurely raised the stop to the entry point.  The logic was to prevent losses but the real effect was to take me out of the trade as I was caught by the long tail of the drop on 7 Jan before it was properly developed.

As at todays chart it still looks like I should have stayed with my first decision and left the stop with the known, finite risk just below the low of 3381 on 24 Dec.

Certainly not raised it so quickly to the entry point.  That way I would still be in this trade and beginning to make a profit – provided it continues to go upwards.  I suppose that answers my earlier question.  If it continues upwards then it was a good flag providing a good profit.  If not, then it will just have deteriorated again and I close the trade while still above the entry point and with a small profit.

The next question is perhaps the resistance which may be present from the low formed back in mid July.  The lesson is not yet over…