You Have To Draw Your Lines In The Sand

If you're a trader, or you're considering becoming a trader, you have to understand that trading is a business and that your capital is your product.

You can't give it away. That doesn't mean you can't have losses, because, believe me, you will have losses. But the key will be to keep those losses to a minimum. Don't allow small losses to morph into big losses. And that's much easier said than done. Humans are wired to always want to be right. When you sell at a loss, you're admitting that you made a mistake. But those admissions are critical to trading success. Nutanix, Inc. (NTNX) is a software company ($DJUSSW) that's been under a LOT of selling pressure the past two weeks after a massive move higher off its June low:

Enter Nutanix, Inc. (NTNX):

After gapping up on very heavy volume in mid-October, NTNX ran from 25 to more than 33 over the next several weeks. In the past two weeks, however, NTNX has quickly fallen back to the top of gap support. This is the type of stock that you want to keep a very tight stop in place. Why? Well, first its PPO has lost centerline support. Next, volume trends have turned quite negative. Third, relative strength lines have broken. Finally, NTNX is part of the software industry, one of the worst-performing groups in 2022. The ONLY two things that NTNX has going for it right now is that it's (1) testing a major gap support level and, (2) its AD line remains very strong. NTNX should hold 25 gap support. If it doesn't, you have to be willing to let it go.

Happy Trading! Tom Bowley Chief Market Strategist EarningsBeats.com Better Timing. Better Trades.