Hey all.  Just wanted to share a quick perspective on the difference between having a "cut loss level" and a "cut loss range."  This is something I will begin to experiment with as many of my losers have had my "level" breached by only a penny or two, just to come back and go the way I was hoping for.  

 

As you can see by the daily chart, this stock has been getting the shit kicked out of it for about 6 weeks. 

 

I shorted CLF off the HOD because this stock often has a quick morning high then trends down.  On Friday, this had a morning high of 8.45, before failing twice right around 8.42.

I got short 1K shares at 8.35 (red arrow) with my risk being that first high.  A quick .05 wash and I covered 500 shares at 8.30 (first green arrow.)  Now, if 8.45 broke I'd be down only $25, instead of $100, which is the $$ amount I like to risk.    I was considering reshorting 500 shares if it climbed back to the 8.45, but decided against it because I'm a weeny sometimes.   This would have brought my avg. up to 8.40.  I ended up cutting my loss at 8.46 the second time it broke (second green candle.)  




Tim G talks about having a bit a wiggle room around risk levels because these stocks will often break levels by a few pennies, then turn around and head the other direction.  He also talks about not covering into strength, which is exactly what I did.   So, the play here should have been to let it break, wait for the first pull back to stay above the risk, and cut the loss there.

This is NOT the same strategy for a stock that is skyrocketing quickly.  CLF is a fairly slow mover, so losses can be kept under control with this technique.

You can see how having a "risk range" instead of a "risk level" would have been very beneficial in this case.  It has happened to me a number of other times as well.  

Anyways....hope this helps someone make a lil $$$.