The pain of scaling up too fast on a winner that turned
Thought I had a solid mid-cap play, $WOLF, riding some good sector momentum. Initial position did well, up about 15% in a few weeks. Instead of taking some off the table or just letting it ride, I got greedy and added more, significantly increasing my exposure when it dipped slightly, thinking it was a healthy pullback. It wasn't. Market sentiment shifted hard on the broader sector, and $WOLF followed. That 15% gain evaporated, and then some. Ended up cutting it for a net loss of about 8% on the total position, which was far larger than my initial stake. Lesson learned: scaling into a winner is great, but don't let conviction outweigh sound risk management. Especially don't double down when the market itself is starting to turn. My initial stop would have been a small win; my final one was a good chunk of capital gone. Idiot move, plain and simple.
It's always tough when that 'healthy pullback' turns out to be a trend reversal. I've been there, thinking a dip is a buying opportunity only for it to keep dipping. What was your original stop-loss strategy, if any, for the added position?