Do not trade commodity related stocks... or at least ones that are directly tied to some of the volatile commodities. Oil and gas were on the top of the list.
This was driven home as I reviewed the trades for COG, Cabot Oil and Gas Corp.
The profit and loss was barely above break even after 12 months and the winning trade rate was under 60% while my overall average is over 80%. I glanced at the rest of the year to date and saw some very obvious whipsaw chart action. Normally I like that sort of activity but the stock is just of a high enough price and the volatility is also just high enough to compound the effect of knocking me out of more trades.
Actually, I should have discounted this one just from glancing at the chart last year while I was selecting stocks to trade as the volatility and pattern obviously were outside of my parameters. Waste of time.
Keep in mind that all I would have to do in order to trade this stock is to widen the stop losses and hold out for better entry prices... but that means having two trading plans and that is not in the plan right now.
Jeff.
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