YOKU update: earnings price-action explained, and trading advice

Since YOKU was on our radar this week, and unfortunately didn’t deliver, we have to figure out why it did not deliver, so we can learn and improve. Well, I did remind everybody on Tuesday that “3) IF price trades below the 8/6 low, of $18.35 then those were NOT 5 waves up in a first wave, but 5 up in a c-wave… Simple as that.” Obviously, price has not (yet) traded below the 8/6 low, but so far it looks like we’ll get there because it counts best as 5 waves down, with wave 3 hitting exactly the 1.382x extension of 1, measured from 2. Wave 5 should then ideally go to 1.764-2.00x extension, bringing it to the mid- to low-$18s. In the larger picture it means the previous 5 waves up were indeed a c-wave of a larger abc (5-3-5 or 3-3-5) pattern. This you won’t know until after the fact…

(click to enlarge)

yoku 08232014

This is also why you have to use appropriate stoplosses and not hope for new highs. They absolutely didn’t come this week. I cut my losses at $2/share. That’s all I could bare, and that’s all there is to it. I am not married to YOKU. I can’t care if it sells dirt or diamonds. I care about price and making money. I don’t like loosing. Be hard on yourself, be strict, be disciplined. Don’t sacrifice a good nite sleep and a stomach ulser over 1 ticker hoping price will go back up (some day…). Cut the looser and run with the winners. Don’t take it personal either. We can never win them all, or (educated) guess them correct before hand. It’s at the end also pure statistics. If you have a winning rate of 85%, like me, than I am still in 15 out of 100 cases wrong! Simple.

I hope this helps in making y’all better traders!

 

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