One strategy is to buy your way out of a bad trade, and by that I mean average down every time it goes against you until the one day it goes in your favor. You make everything back. You hope...
Well hope is not the best thing to ride on for trading, but here is my average down plan. It can be tweaked too. But first you enter a trade, and you go into a trade having the cash to be able to do 5 separate buys. Then from there you pick a set number, and for me that is 10 percent. So every 10 percent my options go against me I do another buy, this ensures that I can average down if I completely miss read a move.
If I get into all 5 buys in a trade, I usually only need a 40 to 50% pull back from where I first entered, and than I am even. That seems to help me not to take big losses so far, but the risk is I could take one huge loss. I guess you just have to be okay with the possibility of one big loss with a lot of little winners.
HD looks like a good short here. 
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Yes, that is a dangerous game, especially if you have a fixed timeframe in which to execute it. One of the maxims I've learned is "don't throw good money after bad". If you hit your stop loss, take your lumps and live to fight another day. You may have been 100% right on your logic, but the timing was wrong. Look for another point to re-enter or just find a different opportunity. In trading, they happen all the time. Just my opinion.
Buying your way out of a bad trade is like doubling down when gambling over and over until you win. It works in theory but if you hit a bad streak, you're rekt.
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