[JeffreyO]

Today SCA gave its profitability report which, as expected was horrible. I had bought into SCA just before its rally two weeks ago. Unfortunately last week SCA changed its name and was unable to be bought/sold for about a week. There were about two days of losses ahead of the profitability report which I was unable to sell from. Now I am able to sell but the stock has lost nearly 30% on the poor profitability report.

The question is, what can you expect from a company such as this which has taken such a beating recently. They were down to .30c a share and rallied to $3.50 and now are back down to about $1.50 give or take. Do you think this company is done for and I should take my loss of about 15% or do you think this company has a chance to re-rally?

P.S. I've watched most of David's videos and I understand that with the sudden after hours drop due to the profitability report I've gone way beyond my stop but it's a tough one to walk away from as stocks often rebound shortly after profitability reports. I'd like to hear what you say before I make my mind up though. --- Edit --- Basically, the overall question is. Leave now on their poor profitability report or set a new stop and hope for a correction?

[Simit Patel]

hi jeffrey,

in my opinion, when to exit has much to do with how much you are invested in the position and the size of your trading account. for instance, many traders do not want to risk more than 2% of their account on a single trade.

so, from that perspective, when you should exit depends on what's going on with your whole trading portfolio.

you might also find the money management course on informedtrades to be useful.

hope that helps.

[David Waring]

Originally Posted by JeffreyO

Today SCA gave its profitability report which, as expected was horrible. I had bought into SCA just before its rally two weeks ago. Unfortunately last week SCA changed its name and was unable to be bought/sold for about a week. There were about two days of losses ahead of the profitability report which I was unable to sell from. Now I am able to sell but the stock has lost nearly 30% on the poor profitability report.

The question is, what can you expect from a company such as this which has taken such a beating recently. They were down to .30c a share and rallied to $3.50 and now are back down to about $1.50 give or take. Do you think this company is done for and I should take my loss of about 15% or do you think this company has a chance to re-rally?

P.S. I've watched most of David's videos and I understand that with the sudden after hours drop due to the profitability report I've gone way beyond my stop but it's a tough one to walk away from as stocks often rebound shortly after profitability reports. I'd like to hear what you say before I make my mind up though. --- Edit --- Basically, the overall question is. Leave now on their poor profitability report or set a new stop and hope for a correction?

Hi JeffreyO,

Glad to hear from you and sorry to hear that you got caught in this stock.

I am not an investment adviser so I can't give specific advice on what you should do here, but I can tell you two different ways that traders may look at this situation. I think the two ways that most traders would look at this are either:

1. They would look at the trade as if it where a new trade. If they would have entered the market at the price where it stands today because they consider it a good trading opportunity, then they would manage the trade as if it were a new trade and trade accordingly. If they would not see the current price as a good trading opportunity then they would exit.

or

2. As the market had breached their rules they would exit immediately, because that is what their strategy calls for when their exit points are breached. They would look at the fact that they were not able to close out their trade for a period of time as irrelevant, as this does not negate the point that they are past their set loss limit where they close trades.

My educational courses point towards the second way of thinking as the most prudent way, but this is of course my opinion on trading. It is also my opinion that each trader needs to decide for themselves the type of trader they are going to be.

Hope that helps. If there are any questions or comments on this one please feel free to post as always.

Best Regards,
Dave

[JeffreyO]

Both of these responses make loads of sense and I take your years of knowledge with great humility. Honestly, when I started I didn't have a marketing plan. I assumed I'd be able to make the right choices based on news headlines, marketing reports, profitability reports, etc. That worked out for awhile and I gained 20% in two weeks. Of course, that is how it goes when you don't have a proper money management plan isn't it. You have your dizzying highs and with this SCA example you have your deafening lows.

Dave, I have watched most of your videos and have begun devising my money management plan. To be honest, I didn't have much into SCA so I think I'm going to see what happens from this point forward and not sell the stock yet. SCA is closing on some big deals that will help its overall viability and help prevent solvency. Although, for all future stocks I'm going to set strict stops and not let it go beyond that. I just wish this stock would have given me an announcement before the name change fiasco. These things happen though and as you say, we must control our emotions and use rational market knowledge.

On that note, I'm going to do more studying, work on my money management plan and stop levels. Since I'm a low funded investor learning the ropes I might have to take slightly more risk to make up for my fees and to make it worthwhile but hopefully as things continue and my knowledge and funds improve I can consistantely be ahead. Thank you again.

[David Waring]

my pleasure. Best of luck and if you have any questions along the way feel free to post.

Best Regards,
Dave