Anatomy of a Trade: Incyte Corp. (INCY)

Incyte Corp.(INCY)  was a trade that was taken back in 2013.  What makes it a little more unique then a few other trades for us is that it took 3 times to finally get our stock to trend from our entry point.  The key point in this example is stocks should never be treated personally, but rather objectively each time.  (Not on the chart)-Our first attempt was made in late February and ended in early April.  The second attempt was made in May but our stop loss was hit in early June.  Incyte made a strong move in late June and proceeded to consolidate for the month of July.  This type of pattern is very typical of potential big winning trades.  Finally on August 1st, Incyte moves out of it's pricing pattern and started a strong trend higher.

Our entry was taken on August the 1st, 2013.   Our entry price was 24.44 and initial stop loss was set at 23. Our risk% was set at .50 for this trade which allowed us to allocate a little over 8% of our capital to INCY.

From the weekly perspective, you can see the overall picture and breakout .  You'll also notice the continuation pattern that occurs within a few weeks from the entry price.  This big pop a few weeks later is also an indication that the stock could have the strength to make a large run.

The final chart displays the completed trade.  The yellow line is used as our entry stop loss so once a trade begins trending, the blue line is then used as our trailing stop.  As you study this trade you will notice price bars painted white.  These bars become painted white usually at the beginning of a trade and towards the end of a price expansion move.  Special script has been written that takes into account specific price actions that we have observed over years of trading.  Once a trade had been in the portfolio for awhile, the white bars become important to our exit strategy.  Because the trade had been on for over 4 months,  the white bars that were being expressed in early 2014 were of importance.  On January 27th, 2014 the price action for the day suggested that it was time to sell.  On January 28th, 2014, all shared were liquidated at 63.75.  The total trade was an effective 160% return on our capital.  

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