35% Profit in RHPC: A Result of Stock Averaging and Chart Analysis

I have explained in this article about the reason I bought shares of Ridi Hydropower Development Company Limited (RHPC).

The stock had showed signals of a ascending triangle breakout. I bought a few shares at Rs. 215 when the stock broke out of the triangle.

For an ascending triangle, the vertical height of the widest part of the triangle is its minimum profit target. Thus, I had kept my target at Rs. 250.

The stock did not rise aggressively after I bought it. It actually lost. This is a common event after breakouts. The stock retests the recently broken resistance level. Now, if the stock retests this zone and bounces up, it is a very good sign. It symbolizes that investors were surprised by the breakout and some started selling at the very first opportunity. However, the bullish aggression prevailed and the stock retested and rose up again.

I was able to buy more shares at Rs. 210 during this retest.

Also, I previously kept the target at Rs. 250. However, I have had a history of exiting my profitable trades too early. Also, it occurred to me that one could see that the stock had broken out of a much bigger ascending triangle than the triangle I previously drew.

Thus, I held on until the day before yesterday when I sold the shares at Rs. 290. The best profit target is at Rs. 315 – Rs. 320. However, I feel safe to not ride a stock till the very peak. You don’t know where the peak is until the stock falls. You can only look back and wish after these things happen. Thus, I am happy with selling after I meet my profit target.

After I sold, the stock has gained another 10% yesterday. These are things that just have to be dealt with as a stock trader. You can’t time everything perfectly. You can’t see things coming from far away. You invest on probabilities, and the upwards swing is nearing its maturity for RHPC, at least in the short term.

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