You're apparently using a preplanned system based on laws of probability. We all do it, of course, whether we refer to it as instinctive calls, technical analysis or just plain old common sense along with a bit of luck.
I steer clear of formulaic systems as they disallow the unusual stuff that can't always be factored into new paradigms. In your scenario, for example, there's a top of $16.17 and a bottom of $10.78. Your top is defined by a 37% up-spread while the bottom is 50%
That's too broad a spread for some folks, especially if working with many thousands of shares. What I'm seeing is a tilt towards selling when there's a swing higher by about a third. Multiply that sell signal by ten thousand shares and we could find ourselves having to absorb a lot of money. And it limits the upside, too, as I see it. One of my picks is CEQP. My cost basis is $7.03 and the stock is at $24.60. Had I used just about any system, I'd have left most of the gains on the table. Not good.
I find nothing wrong with the system, as it were. The limiting of extreme potentials at either end of the profit/loss spectrum has me thinking this might be more useful for an investor more concerned with risk than I am.
I'm 77 years old, a cancer survivor, financially secure, as healthy as could be and very happy in general. I bring myself to the dance every day of my life.
But I have incorporated systems before and at times they helped me find my wheels beneath me. And then there's those times when I felt the imperative to sell strong picks such as LADR, knowing full well I was going to have to face certain consequences as my plan was to put the redeemed funds into less secure plays. Luck has favored me as both ALDW and NGL have moved strongly in my favor.
Thanks for the conversation. And I will explore the AIM users board---thanks for that, too!
