Bio Extraction BXI (TSX Venture) – Consolidation Pattern Started

by Olivier on July 28, 2009

Lots of traders take some time off during summer. It’s been quite a while since I took a few weeks off. I haven’t decided yet when to do that but August is certainly a month where things will slow down a bit for me. I will closely monitor the markets but won’t be in front of my screens during the day as much as I usually do. On to the markets.

BXI.V – Bio Extraction has now started to pull back. A true trend follower would let the market take him out of his position. I am not a true trend follower though. The fact I sold MRGE – Merge Healthcare today and take profits every now and then should be telling. I do try to implement aspects of trend following into my trading though. An important concept of trend following is not to set profit targets because trends last longer and are more powerful than you expect them to be.

Still, I do like to take some profits off the table even if the trend is up. BXI.V is a great example of a stock not matching traders’ expectations. I expected the stock to reach 1.15 – 1.20 and possibly overshooting that target. It did overshoot more than I expected. Then again I’ll repeat what I have stated numerous times in the past: Trading is about making mistakes. Plenty of mistakes. Your job as a trader is to manage those mistakes as winners take care of themselves. In plain English: Spend more time managing your losers and less time worrying about your winners. There is no way you are ever going to be perfect. Traders who are looking for the absolute answer or the sure thing don’t understand the nature of this business. The markets will ultimately take them to the cleaners.

That said I think the 1 – 1.10$ range should be considered a great buying opportunity for BXI.V. Will price dip into that range? I don’t know. I will simply watch the pattern unfold. You could try to buy a sell-off or you can wait for the pattern to develop. I believe that one of the most important concepts in trading is that timing is more important than price. Traders with a low level of experience are literally obsessed with price. A better way to trade is to pay attention to pattern pressure and to improve your timing instead of paying too much attention to price. Your goal should be to constantly improve your trading skills and your understanding of the markets.

Learn to accept mistakes. Take losses. Take profits. Stay humble.

Have a great evening!

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