Here’s your trade on Applovin ($APP) – July 12, 2024
Dan Fitzpatrick here at StockMarketMentor.com. I want to look at Applovin ( NASDAQ: APP ) today. I went into much more detail on this in tonight’s premium Strategy Session, but I thought I’d cover it here in the freebie because I think it’s really important.
We bought this stock on July 3rd, and on this breakout, it worked really well. But then the next day it worked REALLY well but it just absolutely got slammed into the afternoon. And so ultimately, days later, it got stopped out at 82.40. It didn’t happen here, it happened a couple of days later, so this was an unprofitable trade.
You are going to have unprofitable trades, but this was a bad trade. You can great trades that just turn out not to make money, but this was a really crappy one, and this is why. I thought that the entry was really good. Okay, awesome, boom. I like it, volume is a little sub-average but it will do.
The next day we get this, okay. When the stock goes from this to this, this tells you that this breakout is not going to work. And so at the very least, you should be saying, All right, screw this 82.40 stop. If this thing goes down the next day here, I’m out of here because this isn’t working. I should have been out of this trade right away.
I wasn’t, I wound up getting stopped out losing time and some money and now I’m back at this and just put it back on the list. Here’s the reason I’m showing you this, because you might think, Well, this is back on the Active Trade List, Dan’s trying to get back at this stock. It can be a challenge for people, I mean it was for me ages ago, but it’s not anymore because I got tired of losing money.
But when a stock costs you money there’s a tendency to say, Oh man, that really makes me mad, I’m gonna get that stock. The stock doesn’t know you, it doesn’t care about you. And if it did, it wouldn’t like you because you don’t care about it. You’re just trying to make money. So when a trade is over, the trade is over, boom, move on.
I’m looking at this as an entirely new trade, a different trade. Whereas this was a breakout trade, this is a pullback buy. So you would be buying the stock here, and then maybe keep a stop right underneath the 50-day moving average, so you’re risking 5 percent at the most on a trade like this.
Again, it’s a different trade than a breakout trade, this is a pullback trade. But you can see where you’re defining your risk here. And then, if the stock runs up you’re going to make money. If it doesn’t, if it falls you’re not going to lose that much money because you’ve defined your risk.
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