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  1. Default When to Exit a Trade

    I am rather new to being a more active investor. I have been at the game maybe a year or so. Typically I will have between $50-$70k in the market at any one time. Maybe a bit more, maybe a bit less. Right now, I have about $55k invested and my YTD profit is $2555.50. I am reasonably satisfied with that performance, but if I didn't think I had more to learn...if I didn't think maybe I could do better, I wouldn't be here.

    Last year, for example, I was really in the market perhaps 8 months out of the year. Probably between $25-50k in the market at any one time and made about $3000 for the year. Nothing to brag about there.

    I am 54 years old. I have an ESOP program where I work that is, well, nice. My wife and I both max out our 401k's. In addition, I have a pension coming from a company I left 15 years ago. My point here is the money we are risking in the market is not money we are going to depend on in retirement. We are fortunate and we know it.

    Right now, all I have is a basic knowledge of bullish strategies. I am working to expand on that but at the moment, that is all I have to go on.

  2. Default

    Enough background and on to my questions.

    I have trouble deciding where to exit a trade and want to get some advice. Too often, it seems to me, I get out of a trade too early and leave money sitting on the table.

    I like to buy a stock, in a fundamentally strong company, as it bounces off support or breaks through resistance. I try not to anticipate that happening, but actually wait for it to happen before I enter a trade. I always set a stop when I enter a trade and I set that stop at just below a recent (10-30 day) support level. I am usually in a trade for between a few days and a couple of weeks. Therein, I think, lies my problem.

    If I made the wrong call on entering a trade and the stock goes down and I get stopped out, I don't have a problem with that. That's the risk I accept by playing this game and while it definitely happens, it really isn't the purpose of this post. My problem seems to be with adjusting my stop when a stock goes up. Please allow me to give a hypothetical example using random numbers.

  3. Default

    I buy 200 shares of a $30 stock and set my stop at $25. A couple of days later, the stock closes at $30.50. At this point, I pay no attention to support levels. I am only interested in locking in a profit. I raise my stop from $25 to perhaps, $30.25.

    A couple of days later, the stock closes at $32. I am giddy and I raise my stop to say, $31.25. The next day, the stock goes down early and I get stopped out, only to watch the stock bounce up and close at $34.

    While I may be pleased with my $250 profit on this short term trade, obviously there was more money to be made if hadn't had such a tight stop. This happens to me frequently.

    What am I doing wrong? Anything? Is that just a hazard of my trading style?

    Your comments and suggestions are much appreciated.

  4. Default

    You're either going out on the up, or you go past the top and start heading back down.
    Either way it's almost impossible to hit it right at the peak...

    Also right now your best bet is long, lots of market corrections but unless you're speculating
    I would stick with long because it will cost you more to exit and re-enter than just leaving it alone.

    Main thing is don't try and second guess those things but maybe try this:

    Next time you get ready to exit?
    Go ahead and place the order but instead of a straight sell set a Limit Sell
    at the current price +4 or 5%, I wouldn't go much higher.
    Then let it ride, hope it triggers and you just tacked on a few % to your profit.

    But you better watch that stock LOL!
    Because they will, hit that top and start heading back down,
    don't let it be the last time you wished you hadn't got out early hahaha

  5. Default

    Thanks for the advice. A little clarification please on your limit sell idea.

    I set my limit sell at 4% above the current price. If I understand what you are saying, if the stock goes up 4%, I trigger the sale and get out of the trade. My question is, what if the stock goes down? Can I set both a limit sell and a stop loss to protect myself on both ends?

    Here is another concern I have and it may be just that we are rookie traders and things will improve. Between my account and my wife's account, we spend 1-2 hours every market day managing the account. That's not the way they told us it would be when we attended our classes. To be fair though, our class was on intermediate term trading style and we are more short term traders. My coach calls my trading style "swing" trader. I don't know whether that is accurate or not, but that's what he says. I would sure like to cut that time commitment down considerably.

 

 

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