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umfan92

I Think I Made a Rookie Mistake....Help?

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Well after much research, I decided I was going to buy Sprint stock (S). The reason was because it was affordable enough to buy 100 shares so that I might be able to sell covered calls on it. Nothing serious, just to get started and start experiencing different things. Well, I'm sure you all are already shaking your heads at what you have just read and I know. It was stupid. I'm never going to buy a stock based on it's price again.

 

But now that I have learned my lesson, I'm not out of the clear yet. I still own 100 shares of Sprint that I need to decide what to do with. They seem to be dropping a lot. Someone help me figure out what the experienced trader would to do figure out where it's heading. I don't really know how to do all the research yet. What would you look at? And what should I do with my shares?? I bought at 5.48 and it's at 5.22 more or less now. HELP!!

 

Thank you.

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Should bounce a little till 5.47... get rid of them at that price. Sell them off... get out of the pit.

 

Get your money out of the stock and in your pocket... you will get better opportunities.

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so what was the mistake?

- buying shares after doing a lot of research

- buying shares after doing a lot of research and then buying the stock because you could afford to do a strategy in it, and hence the research was a pointless waste of time

- doing a buy write strategy

- not having a stop loss

- or remaining a stock holder

 

if the mistake is having a loss - then you will make lots of them with a trading career

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Sprint is a NYSE stock:

 

NYSE, New York Stock Exchange > Listings > Listings Directory > NYSE

 

Sprint is part of the communications sector of stocks. Many stocks trade similarly to the market they are in. If you chart the SPY or the /ES, you'll see that the chart of those and the chart of Sprint is similar. The market reacts to general news, and economic trends. When there is a lack of news specific to Sprint, it may follow the market it is in, at least to some degree.

 

So if the NYSE 500 is trending down in general, Sprint might be trending down. Look at a one month, daily chart of the SPY and a one month daily chart of Sprint.

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Thanks everyone. Well Sprint went up a little bit today which is better than going down any further. I think I'll wait a while and see what happens. (although I know one of the worst mistakes is trying to wait until it goes back up and end up losing 50%) I guess it wasn't all bad. I learned a lot and now I know that I have to keep researching and learning more.

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The research that you have done is almost immaterial if the recent drop in price is a concern to you. If you are making a long term value investment, and are going to hold the stock for years, then price moves like these are meaningless.

 

If you don't plan on holding the stock for years as a long term value investor, then it seems to make sense to base your decisions on what moves the price short term. It's difficult to predict how news will move the price short term, so many people just avoid being in the market during news releases, and wait to see what is going to happen.

 

You need to stay informed about what the general economic outlook is. If you are pursuing a "Long Only" strategy in a retirement account, and the economic news continues to be bad, it may be difficult to trade.

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I'm a newbie at this, but it looks to me like it's in a slight consolidation phase, but it looks to me like it will keep going down. If it goes down anymore it's breaking it's support, so that will let you know what to do tomorrow.

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Thanks everyone. Well Sprint went up a little bit today which is better than going down any further. I think I'll wait a while and see what happens. (although I know one of the worst mistakes is trying to wait until it goes back up and end up losing 50%) I guess it wasn't all bad. I learned a lot and now I know that I have to keep researching and learning more.
You didn't mention what you learned and not to be harsh but you're missing/ignoring some of the most important ones - mainly protecting your captial. You know waiting to see is a bad idea so why are you doing that? :crap:

 

Your research/analysis should give you an idea of what is probable for the stock as well as identifying the entry,exit and stoploss; place your stop loss when opening the position; buy channelling stocks if your intention is income from writing covered calls - unless the stock is a long term investment. That's just my opinion and I may be wrong :cool:

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Ok well after much back and forth, I ended up keeping the stock. It was going up the last time I posted here. I was hoping it would keep going up but it took a horrific downturn and is now at 5.08. Does anyone have any advice? I know this was stupid, but I guess I haven't learned yet. :(

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I think just about everyone on here has automated stops to prevent big losses. The resistance level should be around 5.05 if I remember correctly. But it looks like it's getting done with a head and shoulders formation. It's pretty iffy, if it drops below 5.05 it's going to crash really fast.

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Ok well after much back and forth, I ended up keeping the stock. It was going up the last time I posted here. I was hoping it would keep going up but it took a horrific downturn and is now at 5.08. Does anyone have any advice? I know this was stupid, but I guess I haven't learned yet. :(

 

What was your original plan?

What IS your plan?

 

get a piece of paper and write them down (ie commitment) if you haven't done so.

 

 

Before you have a plan, there is no use making a progress review.

If there is no progress review, there is no need for plan revision.

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Ok well after much back and forth, I ended up keeping the stock. It was going up the last time I posted here. I was hoping it would keep going up but it took a horrific downturn and is now at 5.08. Does anyone have any advice? I know this was stupid, but I guess I haven't learned yet. :(

 

 

Should bounce a little till 5.47... get rid of them at that price. Sell them off... get out of the pit.

 

Get your money out of the stock and in your pocket... you will get better opportunities.

 

It is testing evens of 5... looking worse. Whether it goes up or down... get out as fast as you can.

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Does anyone have any advice? I know this was stupid, but I guess I haven't learned yet. :(

 

Feel the pain. Let yourself feel the pain. You are in denial, and not allowing yourself to accept the reality of the situation. The pain will help you decide. Feel the pain.

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Ok well after much back and forth, I ended up keeping the stock. It was going up the last time I posted here. I was hoping it would keep going up but it took a horrific downturn and is now at 5.08. Does anyone have any advice? I know this was stupid, but I guess I haven't learned yet. :(

 

You know… you're right… you haven't learned yet…

 

You entered a trade that you didn't understand, during a time in the market that you didn't understand. You also took a trade (that you didn't want) based on what you could afford, to experiment with some strategy that you didn't understand (obviously). You were told to exit the trade (which you didn't). You were told to hang on to the trade if you believed in your research (which you did do… although; I doubt that it was anything more than hope that kept you in).

 

If you want to experiment and throw money at the experience, I personally have no problem with that (for so many reasons)… it's a learning experience. The market is a tough place to make a buck, and getting your a** kicked is actually helpful in many regards. The number of times this happens before you start to catch on will dictate how long you remain.

 

You may consider that "the market" has handed you a raw deal, but nothing could be further from the truth. You've done this to yourself… understand this (in a meaningful way), and the battle is half over.

 

Every person (with some experience) who read your response knew what was going to happen: "you were going to follow this trade down"… everybody knew it. We all knew it because to one extent or another we have all been there. In life… "hope" is a good thing… it keeps us going from one day to the next. In the market… "hope" is not allowed… it either "is", or it "isn't".

 

As a trader, you need to come to the understanding, that once a trade goes against you… it's time to get out. Once the covered call strategy failed…"it's a failed trade"… no if, ands or buts… get out. Sprint (S) may catch a bid, and may rebound… who knows for sure. I have no advice as to what you should do now… it's your call (it always is). On the other hand, if you've entered the trade as a long term investor, and you believe in the story… certainly, hang on…with the understanding that there needs to be a limit to the pain.

 

One of the best trades I ever made, and one that has stuck with me through the years, was the first time that I had to "chew my leg off" to exit a trade. It hurts something awful, but once you are free… what a relief (generate some cash… live to fight another day).

 

Best of good fortunes going forward.

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That's a little blunt, but he's absolutely right.

 

However, I think it's a good thing that you made this mistake. No one can make much money off of 548 dollars. Even if it went up 10% this month, that's only $54.80 with commissions of probably $20.00 round trip leaving you with a total profit of $34.80. That's not worth the stress that you seem to be going through. But this is why I say it's a good thing. You learned something didn't you? The worst thing that could happen to you is that you jumped into this and had success, because it would have been luck, and then you might risk more money next time, and really be in a pickle.

 

I assume you're between 18 and 21 because this sounds really familiar to me when I was in college and wanting some extra cash. However, if you really didn't need the money, which you shouldn't have if you put it in there. if you did need the money, you're in this for gambling, your state's scratch-off's would give you better odd's, anyway, if you really didn't need the money, then just leave it. In the long run it will eventually go up. Probably at the rate of about 7% a year or so, maybe you could move it to an IRA and get a tax right off for it. I want to say I got 20% discount on my taxes for my contributions to my IRA.

 

Summary: In an optimistic/realistic sense, this is a good thing. Hopefully you learned something. But I do say thank you, because I may try to swing trade this on the way down:2c:

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Watch the stock tomorrow, looks like a morning doji star is forming, you might be in luck!

 

your "analysis" is based on what you wish to see...

not seeing what the market is showing you.

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I don't wish to see anything, just looked like a possibility to watch for if the there was a positive candle formation today. It of course didn't form, but if it did... Anyway, I think the only reason it went up at all was a "head and shoulder's" completing, which I had stated earlier. Would you agree with that? Not trying to act like I know anything, just trying to have my theories critiqued.

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umfan92, may i suggest another stock for you to research? Universal Insurance Holdings Inc. (UVE) is great fundamentally and nearly great technically. Additional plusses are it pays a dividend and has options coverage. In your situation I would buy 100 shares limit $4.60. Here is an article to get you started in your research. Good luck!

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I can't give you any golden advice because I don't believe in advice. The responsibility for your experience is yours. The only person you'll really listen to is yourself. And it seems your advice to yourself has been flawed. So. Please read the following several times in different moods and think about it.

Whatever you do, you must know how to plan. Are you a builder? Where is your plan?

Are you a student? What is your plan. Are you a doctor? You need to know how to proceed. Stop immediately! No, really, STOP and rethink what you are doing. I am the proud owner of several blown-out accounts so I can tell you that you are doing exactly what I have already done and it does not work. Perhaps you could read Jack Schwager's series of books about Market Wizards. ( read several times, it takes awhile to sink in ). The very best of good luck to you. I would love to read in time that you have become successful. :)

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