Sunday, January 27, 2013

Intuitive Surgical (ISRG)

BUY signal the week of 1.22.13 (Friday) at $577.82. My first stop will be $473.57, so my risk (R)/share is going to be $104.25 (18.0%). 

History (beginning in 2003):
Winning Trades: 4 | 80.0% | +$130.54/share avg.
Losing Trades: 1 | 20.0% | -$34.90/share avg.
Average Trade: +167.6% | +$97.45/share | Reward-to-Risk (R): +4.45

Regardless of what my gut might be telling me on this one (too expensive and too much risk in absolute dollar terms), I'm going to trust my system and take this trade. It has a much better track record over the last 10 years than my gut does. 

On top of that, at first glance $104.25/share might sound like a lot of risk, but with a 1% risk model (I only risk 1% of my portfolio on any single trade), that 18% risk is only a 0.2% overall portfolio risk. I think I can live with that.

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