How Should You Trade Facebook’s Stock Price Drop?

How Should You Trade Facebook’s Stock Price Drop?
This is a Guest Post by AK of Fallible
AK has been an analyst at long/short equity investment firms, global macro funds, and corporate economics departments. He co-founded Macro Ops and is the host of Fallible.

Facebook’s (FB) stock price dropped nearly 20% after their revenue target miss. This was a huge drop. And because of it, I’ve been getting a lot of calls asking me what to do. So in this video I’ll explain how our team is playing this drop. Make sure to click play above!

Before we get to how to play this move, I have a question. Why is everyone so concerned with this? I assumed the people asking me about this stock were either tracking Facebook very closely or actually held a position…

Nope! The majority had no relation to the stock. Facebook had nothing to do with their trading strategy. Well most didn’t really have a strategy, but that’s a different story. Regardless though, they were asking me whether they should buy or even short Facebook at these levels.

My immediate response was that if Facebook’s stock doesn’t relate to your strategy, you shouldn’t be trading it. There is so much opportunity in the market. There is always going to be some opportunity for you to chase. But that doesn’t mean you should chase it. Oftentimes if the opportunity isn’t related to your strategy, instead of making money trying to pursue it, you will lose.

This is the reason it’s so important to control your emotions in the market. The reason a lot of these investors are compelled to look into Facebook is because of the fear of missing out. On a big move like that, they want to make sure they are making money “just like everyone else”.

To learn more, make sure you watch the video above!

And as always, stay Fallible out there investors!

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***All content, opinions, and commentary by Fallible is intended for general information and educational purposes only, NOT INVESTMENT ADVICE.