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Stopped Out Of A Trade? Don't Be Shy To Buy Again

If you've just been shaken out of a stock, the last thing on your mind would be to jump back in. But you should be ready to do just that if the opportunity presents itself.

Investing is not as easy as hitting the buy button on a stock that's breaking out from a base and simply waiting to ring the cash register. Not every trade is going to be a winner. Sometimes, it may take several buys before a stock finally gets going.

Even if you've studied the market, analyzed the stock's industry, and read everything about the company and then bought the stock as it came out of a picture-perfect in big , there's still no guarantee that the trade will be profitable.

Investing is an uncertain game.

If a stock just dinged you for an 8% loss, chances are that you may get a little gun shy. But don't just give up and move on to another stock just yet. This is especially true if there are no major changes in its fundamentals.

Continue to pay attention to price-and-volume action, especially if you still have conviction in the stock. Don't allow your emotions to hold you back.

If the same stock goes through its or sets up again and breaks out in solid volume, investors should take a second stab at it — especially if the market is in a confirmed uptrend.

Investors may even try buying a larger position the second time around. It may seem contrary to conventional wisdom. But it helps to boost one's psychology and confidence.

No one likes to get shaken out of a stock, but it'll happen. An analyst downgrade, bad news from an industry peer or just general market noise can stop you out.

Ulta Beauty (ULTA) cleared a faulty base in the week ended Sept. 16, 2011. 1 It rose 7% past a 68.90 buy point before triggering the 8% sell rule two weeks later. 2 The stock cleared a 74.10 trigger in a consolidation in the week ended Nov. 4. 3 That went nowhere and also failed.

Ulta went on to form another base right away. This time, it shaped a six-week cup with a 75.80 buy point. It cleared that trigger in the week ended Jan. 20, 2012. 4 Despite lacking brisk volume on the breakout (volume came in strong on Jan. 5 and in early February, after forming a three-weeks-tight pattern), the retailer jumped 28% in about three months before easing back.