Discipline, Experience, and Trusting your gut

Shortly after I got into my position in ARDI this morning I opened up DailyGraphs (my chart service) to check out its chart again. There is a saying that goes something like, "Trust your gut" and what I saw was something that could not be ignored. I have looked at 10s of thousands of charts in my short 3 year run trading and this is a pattern that I do not like at all. Look closely at the graph below and you will see the ARDI in a daily chart. Every Vertical line represents a seperate day and if the line is red that means it was a down day and if the line is blue that means it was an even or up day. Now, what is CRITICAL in this pattern over the last 3 days (since the gap down last Thursday which is denoted by the gap in lines) is how it looks like the edge of a cliff. If you can imagine running to the edge of a cliff, slidding on ur feet, then stopping right at the edge off balance; this is what the pattern is. The volume (which is the vertical lines below the price) has decreased every day. The stock has lost its volatility upwards because of this pattern and is in a heavily bearish position. What happens 9 out of 10 times is that the stock leans too far over and falls to new lows.


ARDI Bad Setup Source: DailyGraphs.com

The edge price was $2.50 which in an intra-day is the price that gets the most support before collapsing (today it had about 15,000 shares of support). I ended up getting out at $2.50 and after everything the trade costed me $102.40. My account balance now is $10,073.28 but I feel much better. This in my eyes is a loss for the records because I should have looked at the chart closer than I did. I am lucky to have gotten in at a competitive price because this mistake would have costed me much more. I will not be able to trade my account till probably Friday now or Monday depending on how long it takes for my orders to process. Check for a post later on tonight or tomorrow putting ARDI in a conclusion summary. Have a great afternoon,

To the future,