Question: What is the best course of action if the stock you bought at closing gets either: 1: Good News (Profits exceed expectations 300%!!) 2: Bad News (Profits Down 300%. CEO jumps out window - lands on panhandler..)
For purposes of the question, you are a swing trader or day trader that did not close out a position, NOT a long term investor.
I am guessing for Good, set STOP LOSS order and see how hight you can ride it the next day and bail out at top. For Bad, set MARKET SELL order before market opens as to limit your loss as the price opens/drops initially?
I know there is no guaranteed correct answer, but what would you do with overnight news like the above? am I close in my guesses?
posted
Market sell would basically tell your broker to get whatever he can for your shares. Good chance that would mean you'd sell at the bottom. Think of it this way, most people who see that bad news will either do what you said, or wait for the "overreaction" to correct a bit, and sell higher than the initial gapped down open.
Setting a trailing stop-loss on good news would mean you keep moving your stop-loss up as the PPS climbs, so if it starts to slide, you get out with profit, as opposed to setting a starndard stop-loss and potentially losing all gains if it drops all the way back.
That's just my gut. You could probably find some instances of each case and see what the PPS did at and shortly after the open.
Good luck.
Posts: 5508 | From: Southeastern PA | Registered: Jan 2006
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posted
do some DD for the chances of recovery if it looks bad. If you're in that means you should be able to digest what the results will be fairly quickly imo. Jumping out all or some and then looking for the "dead cat bounce" to average down or hop back in (watching level IIs). I like Pcolas strategy with the trailing stop-loss. some brokers may not let you do that with penny stocks though so a finger on the trigger - what goes up almost always comes back down - and then some. main thing is covering your initial money imo. I have seen some suggest playing a certain percent of decline after a major run ~ if it trails back 25% sell all (that seems a bit drastic to me ~ i'd be itchin at just 10%), some say 15%. imo a gain is a gain and this could be part of your rules of when to sell any stock. Greed is bad feed. If it goes back up after your mark good for the other guy. imo imo imo
-------------------- All post are my opinion. Do your own DD. Who's clicking your buy/sell button!? Posts: 7800 | From: Virginia | Registered: May 2006
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