Kroger Co Analysis

Kroger looks very interesting.

It appears to be a low volatility stock, that’s moving upward slowly and steadily. Of course, whilst past patterns predict future patterns, no one (I know) can say what will happen. Kroger could well fall 2000pts. I don’t know. But the game is about much more than prediction. It is about acceptable loss in relation to probability of making a favourable move.

One important feature of this stock is that it was most unlike CoStar with it’s massive red and green candles and large ATR. (Will do a separate post simplifying ATR later)

I’ve entered Kroger going long. [The ‘sue yourself’ principle applies to anybody seeing this and decides to trade it.]

Screen Shot 02-28-15 at 11.43 AM

 

Update: Kroger was a good snipe.

Kroger_hit_03-09-15 at 08.49 AM

Took a significant risk on this by betting heavily, however the characteristics of the stock warranted the risk. I hit my reward:risk ratio and got out, leaving behind more profits.

Lessons:

  1. It was a high probability hit and my analysis appeared to be accurate and well considered – even in hindsight.
  2. Much time spent thinking about it, and balancing the risks i.e. it was a good snipe.
  3. On occasion taking bigger than usual risk is warranted, but the probability of the hit has to be pretty high and based on objective evidence (some of which was not just in the chart – some looking at fundamentals were important).
  4. Take the money at range where targets have been met, but don’t stretch too far beyond driven by ‘greed’. The idea is to make far more on aggregate of winnings than on losses.

Actions:

  1. Reinforce the idea that high probability snipes are more profitable.
  2. Avoid lower probability hits that are much harder work in the longer term (i.e. more losses and wins to make similar aggregate profits – so take a more efficient but careful snipe.).
  3. Develop an algorithm to extract high-gain snipes.

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