Trying to analyze trading mistake

[axuiyitiku]

Hey guys.

So while paper trading last week I ended up making a bit of a blunder.

I went short on General Motors on the 15:th of July. Things were going pretty well for me up until the 23:rd of July when the price suddenly made a pretty big jump in price, up to 32,60 USD from 30,0. If that had been real trading, I would have lost quite a bit of money.

So, right now I'm trying to analyze what went wrong, what caused this jump, and more importantly, how I can avoid similar mistakes. At the moment my best guess is that what made the stock go up so suddenly was an earnings rapport on the 23:rd that was above estimate.

So my question basically is; do you think I'm right in my assumption that it was said earnings rapport which caused this jump in price and how would you recommend that I trade in the future so that this doesn't happen again? =)

http://oi62.tinypic.com/2z68753.jpg

[bbhuijhq82]

I wouldn't short for long terms...I rarely short overnight just for this reason. And certainly don't short through an earnings report. If you want to learn how to manipulate your directional risk as a way to hedge against this kind of move whether long or short....learn how option strategies can be used to reduce or define your risk.
Also define your risk at order entry by staying small.
Also you could have taken profits at a predetermined level....example if you were up 10% that might be a good place to cash in.

Keep in mind any long or short stock position has a 1 for 1 directional risk...means if it goes your way 1$ you make a 1$ and against you 1 you lose 1. You can manage this risk using options to reduce this 1 for 1 relationship without increasing your risk or capital requirements.

[Bensip]

But ye if it's just a long term hold then ignore earnings and just ride them out....but if it's a short term play...take profits and cut losses early.
Net/Net more money is probably made from selling trading ideas than the trades themselves make.

[BernardWeri]

Only July 30th, GM is going to be reporting great earnings. Positive news came off on the 23th rd and investors and reports are speculating that the earning will beat the street, hence why so many people are buying and the stock is going up.

One article is here. http://www.bidnessetc.com/48375-ear...otors-company-gm-to-report-q2-earnings-today/ (http://www.bidnessetc.com/48375-earnings-whispers-general-motors-company-gm-to-report-q2-earnings-today/)

You have to keep live feeds on all news on the stock you're invested in at all times. Things can go up one sec and down the next.

[BerniceMn]

$GM filed its SEC 10-Q (earnings report) on July 23 which caused the above mentioned short position to take a hit. http://www.sec.gov/Archives/edgar/data/1467858/000146785815000175/gmq22015.htm
Above is the actual filing.
Not sure what your referring to for the 30th.
And they've given up most of the gains from then probably due to over all market weakness and news of possible criminal lawsuits coming over faulty ignition switches. ye never know what lies around the corner.