Lessons Learned From Shorting MonsantoPosted: August 8, 2013
As shown below and if you have been one of the short sellers of MON on Tuesday, the stock did a hard throwback into the H&S complex pattern, clearly taking out a lot of shorts. Now, what traders would or will do falls into the below categories:
1) Double down and averaging the losing position.(in case you didtnt have a stop loss)
2) Re Enter the short trade again at a higher price thinking that it will not go any higher.
3) Re Enter the short trade again with double or triple the initial value of the first trade.
4) Ignore the loss and move on to other stocks.
5) Re Enter the short trade on the second break of the initial neckline.
The best action would be 4 or 5. 1-3 is basically trying to get revenge and taking a lot of extra risk because of your damaged ego (Yes, this is what really occurs in the mind of traders which chose these actions)
To conclude the short opportunity was a good trade with clear pattern and boundaries, unfortunately it was an unprofitable trade, THATS ALL..
Please share and if you shorted MON, what did you do from the above?