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Author Topic: What is your TP and SL? What's your win ratio?
permanentjaun
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Howdy folks,

It's a simple question. What is your take profit and stop loss point? Are you aiming for 5%, 10%, 20% or more? Based off of how much you are looking to win, how much are you willing to lose on a trade? This assumes your levels are set in stone based on your system. If they're not set in stone and you base it off the charts, what size move are you generally looking for, and then how much are you typically willing to lose?

Now, given your answer, what has been your win/loss ratio?

Unfortunately this is a penny stock board, and perhaps will get very outrageous answers. I'm more interested in the trades you place on stocks that actually have to file reports. I'm done with pennies.

So what's your goal?

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PCola77
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Using my Form-4 trading methodology I have been selling at the earlier of 5% gain or 5 days held. In other words, if I get 5% within a week I sell it then, and if not, I sell after a week.

In the last ~1 month there have been 6 "signals", with 4 going up 5% within a week, one selling for +2% after a week, and 1 down 10% after a week (see my thread on the hot stocks board for the literal results, if you so desire, because I didn't buy all 6).

In addition, running my program retrospectively showed something like 14 of 15 since September would have netted 5% and one would have been about break even.

Though it's late, and I'm going from memory right now, but I think that's at least close to correct.

In other words, I think 18/21 would have made 5% (90% combined), and the other 3 would have lost 8% combined for a "paper net" of over 80% in about 5 months.

I'd be thrilled to see similar results for the next 5 months, obviously.

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permanentjaun
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I just took a quick look at your thread. It looks like you're trading somewhat fundamentally when you look for those Form-4's.

Would you mind explaining the 5% up then the one 10% down after a week? Are you purposely putting your SL far away to prevent a premature stop out? Are you still instituting a trailing stop loss?

I'm thinking of building a system to look for the simple 5% wins and then close the trade. I'd rather have consistency than big gains. Compounding is a very powerful tool.

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PCola77
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Not sure I understand the qustion exactly, but my sell rule is simply: Sell if it goes up 5%, or sell at the end of the 5th day. So essentially no, I don't have a stoploss set.

Let me know if that didn't answer your question.

And yes, compounding is huge. If I could get 1 5% gainer per week (and no losers), that would be 1264% gain in a year if you compound it, as opposed to 260% without compounding (5% x 52). Obviously that's not realistic, but shows the power of compounding.

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permanentjaun
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Gotcha. Could you explain how you came to the decision to not have a SL? Why not have a system where you either sell if it goes up 5%, down 5%, or at the end of the week if neither is hit? Are you finding a lot of times where it will go down 5-10% and then rally to your 5% gain?

That just seems counter to what you always hear of cutting the losers and running the winners. I noticed on your thread you sort of did that in the beginning and had some gains of 10-20%. Was that not working well?

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PCola77
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What was happening to me is I could not figure out when to sell. I would see a 15% gain, but then hold too long and end up selling for a loss. I was trying to get more of the upper end at first, and I'd see one go up 10%, then back to breakeven, then run up 50%, so I tried to figure out a way to hold through that initial drop back to even, but could never seem to get it right.

Another thing is that with this method I can just buy and then immediately put in my sell order and not look at it again for a week. Since I can't actively trade during the work day, that is a big selling point for me. trading based on charts, etc, requires watching closely, which I just can't do.

I can't remember if I tested what you mentioned, as far as how many drop 5% then rebound to gain 5%, but I kinda think I did test it, and yeah, you made more if you held through the initial drop. I'll try to test it again one of these days and save it somewhere this time [Smile]

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permanentjaun
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I'm probably going to institute a very similar money management system. I like the idea of taking small 5% bites and compounding rather than looking for the big runs.

I'm not sure I agree with holding during the initial drop if that drop is more than 5%. You've made it easy to tell when to exit when you win, but not necessarily when you lose. Depending on how aggressive you are could leave you open to back tracking several winning trades if it drops 15% or more before the week is done.

What was your decision to cut the trades at the end of the week? Do you find mid to large caps move enough during the week that you can get your 5% goal pretty consistently? I wonder what your results would have been like if you held the trades through the weekend. Perhaps just holding the trades that were neutral or positive a couple points might have been best, but exiting ones that were down 1-4% on friday.

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PCola77
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Just to clarify, I sell after 1 week, not at the end of the week. So if I buy on a Wednesday, I'd sell at the close the following Tuesday, not the Friday. So weekends have nothing to do with it.
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permanentjaun
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Oh ok, that makes sense.

Are you finding your plays typically get the 5%?

Are you limiting your plays to maybe only midcap stocks that have more movement than a large blue chip might have?

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PCola77
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Yeah, like I said, something like 18 of 21 have hit the 5% since September. I am not limiting it to anything particular, as long as it meets all of my criteria.

quote:
Originally posted by permanentjaun:
Oh ok, that makes sense.

Are you finding your plays typically get the 5%?

Are you limiting your plays to maybe only midcap stocks that have more movement than a large blue chip might have?


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Machiavelli
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I pretty much set my SL at the 40 MA or just below if they are lined up correctly in a uptrend. To give the stock some wiggle room.MA's tend to act as Support especially the first two (20 and 40 MA in my observations). I also watch a stock as it approaches the RSI 50 line because it is of my opinion that traders including MM's watch this line and more times then none a stock bounces off this line so I trade accordingly. Don't ask me to give a current stock example because I'm superstitious and I seem to jinx myself whenever I name a stock on a forum lol As for profits, I let them run till the stock loses steam especially for Big Board stocks.

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PCola77
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Mach, someday I hope to be in a position where I can do the kind of trading that you do. It sucks to have to set hard and fast rules because you can't watch the charts...
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permanentjaun
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quote:
Originally posted by PCola77:
Mach, someday I hope to be in a position where I can do the kind of trading that you do. It sucks to have to set hard and fast rules because you can't watch the charts...

If you ask me I think setting hard and fast rules is what traders need. We're always told to be good trades you need to trade without emotion. That's what I'm trying to build a system in to. With hard and fast rules in as many aspects of the system then it makes it easy to remove emotion. Currently the only area of the system I'm building is in the decision of which stock to enter and when. Once I'm in, it's a numbers game. IMO that's how I think it should be.
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PCola77
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I agree with you, I just think I worded it poorly. When I said hard and fast rule I meant "sell at 5%" or "sell after x days". As opposed to a rule like "sell when the RSI does X, and the MACDs do y", which allows you to get more of the run on a big winner. The latter rule is still emotionless, but it's something that you can't do if you can't watch the charts.

quote:
Originally posted by permanentjaun:
quote:
Originally posted by PCola77:
Mach, someday I hope to be in a position where I can do the kind of trading that you do. It sucks to have to set hard and fast rules because you can't watch the charts...

If you ask me I think setting hard and fast rules is what traders need. We're always told to be good trades you need to trade without emotion. That's what I'm trying to build a system in to. With hard and fast rules in as many aspects of the system then it makes it easy to remove emotion. Currently the only area of the system I'm building is in the decision of which stock to enter and when. Once I'm in, it's a numbers game. IMO that's how I think it should be.

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T e x
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whee...good to see buds here, enjoying intelligent discourse.

My two cents' worth: I agree with Mach, in the main (on many trading points), but to "run blind," ie, trade without watching the session, I set stops (or limit sells, depending on the broker) based on historical charts. In other words, looking closely for similar setups with the indicators. Sorry, no data, though: haven't traded thusly in quite some time. I did get better at it, though...fwiw

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permanentjaun
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quote:
Originally posted by PCola77:
[QB] I agree with you, I just think I worded it poorly. When I said hard and fast rule I meant "sell at 5%" or "sell after x days". As opposed to a rule like "sell when the RSI does X, and the MACDs do y", which allows you to get more of the run on a big winner. The latter rule is still emotionless, but it's something that you can't do if you can't watch the charts.


Gotcha. At that point it's just personal preference in not only your trading style, but also money management style. I prefer putting larger positions into a trade, taking those small percentage gains, and then taking my money out quickly to remove it from risk.

The way I see it, even if you're right in the direction of the stock, it can be hard to gauge how far it will continue to move. There are going to be a lot more opportunities for you to be able to take a quick 5% in a move than 10% or more.

Of course, this opens up a whole new can of worms.

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T e x
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quote:
The way I see it, even if you're right in the direction of the stock, it can be hard to gauge how far it will continue to move.
is why I say study historical charts...may not work out, but when you find a match...bingo.

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permanentjaun
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I think we're saying the same thing, somewhat.

I'm not sure what you mean by studying historical charts. I'd still use the charts to recognize S/R, and other patterns, but if there isn't at least a possibility for the stock to move 5% before hitting resistance I won't trade it. Now, if it is an open ceiling and there isn't resistance for 30-40%, I'll still only take 5%.

You need to explain what you mean by historical charts.

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T e x
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quote:
Originally posted by permanentjaun:
I think we're saying the same thing, somewhat.

I'm not sure what you mean by studying historical charts. I'd still use the charts to recognize S/R, and other patterns, but if there isn't at least a possibility for the stock to move 5% before hitting resistance I won't trade it. Now, if it is an open ceiling and there isn't resistance for 30-40%, I'll still only take 5%.

You need to explain what you mean by historical charts.

Well, you may find a similar setup in the previous six months. If it looks good, dig in.

You may not find a similar setup until you examine the previous two years... or longer.

This requires, imsso (in my simple stoopid opinion, lol), really working on your TA skills. For instance, some define TA as simply "studying charts."

OK...great. hold this tissue while I blow my nose, right?

Seriously and quite realistically, you got at least three ways to read charts: 1) Western "patterns" 2) Eastern "candlesticks" and 3) indicator interplay.

Simply stated, "historical chart analysis" comprises all three. Am *not* saying we can totlly ignore FA, but given a similar FA environment, we can discern patterns.

Maybe all I'm saying is "Learn the TA indicators that work for you." For instance, my good bud Mach loves RSI. Although I do check RSI, I personally give more weight (on a buy signal) to the interplay between AROON and WILLIAMS %.

What I'm saying is...some "see" certain indicators as meanignful, cuz of individual brain patterns. If I "see" only 10%, then I bail at 8.75 or thereabouts. If I "see" 20%, then I may test 17% with the majority of my position.

If it keeps rising? I sell into the run and keep some "Do or Die" shares IF I like it. Otherwise, dump it all...

great thread, btw [Smile]

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PCola77
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By the way, if you haven't kept up with my form 4 thread. Both of my buy signals hit their 5% this week, so I'm now 7 for 9 in the last 6 weeks for about 27% (7 up 5%, 1 up 2%, 1 down 10%)
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permanentjaun
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Can you note on their performance in terms of getting to the 5%? Did they go down 6% and then up 5%? (Still don't like the possible free fall)
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PCola77
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Well there's only 5 days of data for each, max, so it would be pretty easy to look at daily lows and charts to see that. I can give you the list of symbols and dates and you can check 'em out if you are interested in seeing the path of each. I will do so as well, but thought you may want to see it yourself.
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PCola77
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Okay, here's some info:

12/18/07 MCGC opened at 11.06, I bought at 11.25. 11.06 was the low of the day, and it hit 5% (11.82) the same day, with a HOD of 11.88

12/19/07 NCS opened at 25.59 and I got in at 25.55. I never noticed it before, but I got in at the LOD. Day 2 LOD was 25.07 which is about 2% down. Day 3 it hit 5% during the day, with a LOD of 26.40

12/19/07 VC opened at 4.23. LOD was 4.13. Day 2 LOD was 4.02 which is down just slightly under 5%. Day 3 hit 5% with a LOD of 4.14

1/2/08 WCC opened at 39.32, HOD of 40.54, LOD of 38.57. Day 2 HOD 39.70 LOD 38.69. Day 3 HOD 38.68 LOD 37.57 Day 4 HOD 38.46 LOD 37.38 (about 5% down) Day 5 HOD 37.99 LOD 35.51 EOD 35.57 (down about 10%)

1/10/08 SBGI opened at 8.46 HOD 8.66 LOD 8.21 (down about 3%). Day 2 HOD 8.56 LOD 8.29. Day 3 HOD 8.44 LOD 8.23. Day 4 HOD 8.51 LOD 8.21. Day 5 HOD 8.81 LOD 8.29 EOD 8.66 (+2.3% after 5 days)

1/22/08 DBRN opened at 10.13 and hit 5% less than 1/2 hour later

1/25/08 CWTR opened at 4.74 LOD 4.61. (down about 2.7%) Day 2 hit 5% and LOD was 4.74.

1/29/08 RJF opened at 27.89, but my market order filled at 27.23 (there was a weird spike at the open with very little volume that seemes to be an anomoly). HOD was 29.14 (but that wasn't "real". The "eral HOD was just under $28.00) LOD was 26.83. Day 2 HOD 28.11 LOD 27.38. Day 3 HOD 28.27 LOD 26.57 (down about 2.5%). Day 4 hit 5% with a HOD of 29.00 and LOD of 27.85.

1/29/08 MW opened at 23.73 with a HOD of 24.28 and LOD of 23.31. Day 2 HOD 24.47 LOD 23.51. Day 3 hit 5% after a large drop at the open with a LOD of 22.14 (down 7%, but this is another "fake" drop, the "real" LOD was more like 23.25, which would be down about 2%, but if you had a stoploss in, I guess it would be triggered).

So that's the progression of the 9. Hope that helps some.

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permanentjaun
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Thanks. Very interesting.

You're a brave soul. Most of the stocks are in serious down trends, and if not for the latest market boom probably would still continuing that path. I would not have had the cajones to hold them when they're down 5% as I would have assumed a continuation of said trend. Even more daring is that they're fairly close to their resistance points; at least most of them.

Do you short?

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permanentjaun
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quote:
Originally posted by T e x:

Well, you may find a similar setup in the previous six months. If it looks good, dig in.

You may not find a similar setup until you examine the previous two years... or longer.

This requires, imsso (in my simple stoopid opinion, lol), really working on your TA skills. For instance, some define TA as simply "studying charts."

OK...great. hold this tissue while I blow my nose, right?

Seriously and quite realistically, you got at least three ways to read charts: 1) Western "patterns" 2) Eastern "candlesticks" and 3) indicator interplay.

Simply stated, "historical chart analysis" comprises all three. Am *not* saying we can totlly ignore FA, but given a similar FA environment, we can discern patterns.

Maybe all I'm saying is "Learn the TA indicators that work for you." For instance, my good bud Mach loves RSI. Although I do check RSI, I personally give more weight (on a buy signal) to the interplay between AROON and WILLIAMS %.

What I'm saying is...some "see" certain indicators as meanignful, cuz of individual brain patterns. If I "see" only 10%, then I bail at 8.75 or thereabouts. If I "see" 20%, then I may test 17% with the majority of my position.

If it keeps rising? I sell into the run and keep some "Do or Die" shares IF I like it. Otherwise, dump it all...

great thread, btw [Smile]
[/QUOTE]

Yes, trade what works for you. Do you really look for a pattern in a stock to repeat itself? I ask in the manner that you can't really scan a stock for the repeating pattern. You can search for it to be in a cup/handle, flag formation, doji's, but that's no guarantee the stock has had that formation before. Would you not trade it without the repeat? IMSSO I think you might be digging deeper into your TA than you have to.

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T e x
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Matt, I don't do "formations" per se. Perhaps I will learn more and decide "head n' shoulders" or "double tops" really mean something. For now, not so much.

I have my indicators that I like, which are mostly buy side. For me, the entry point is crucial. To that end, I can definitely see parallels within my chosen indicators. For instance, I called the gap-to-be-filled early in the FHAL/CSHD drama, down around 13.

Put it this way--if you can't see a pattern? You're not trading on TA... may be FA or may be guts--but it's not TA.

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Nashoba Holba Chepulechi
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Maybe I'm not understanding you correctly. It's been a long week.

I guess you're primarily saying that you use indicators in how they're relative to the stock. So while RSI crossing 50 is generally perceived as being a strong signal, on this stock that hasn't been the case in the past. Am I understanding you correctly?

I need to go to bed.

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PCola77
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Well, unless I'm not understanding your point, I think only one went down more than 5%. Or were you sayign you would have sold WCC at that point? If so, looking at it retrospectively, you would have made the right move, but I'm not comfortable enough that there won't be cases wher it goes down 5% and then back up to +5%.

Never know though, of course.

quote:
Originally posted by permanentjaun:
Thanks. Very interesting.

You're a brave soul. Most of the stocks are in serious down trends, and if not for the latest market boom probably would still continuing that path. I would not have had the cajones to hold them when they're down 5% as I would have assumed a continuation of said trend. Even more daring is that they're fairly close to their resistance points; at least most of them.

Do you short?


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PCola77
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Oh, and no I don't short, and yes, we need to go to bed (but not together...)
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Machiavelli
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quote:
Originally posted by T e x:
quote:
The way I see it, even if you're right in the direction of the stock, it can be hard to gauge how far it will continue to move.
is why I say study historical charts...may not work out, but when you find a match...bingo.
There is no reason to sell out of a stock that is in a clear uptrend. I am currently in a stock in a nice uptrend (no i won't name it and jinx myself lol)and if I thought like everyone else at getting out at 5, 10 or whatever % I would of missed the profits I have already gotten. Problem with people is Emotions. They see a pullback they immediately get nervous and panic sell. Let your profits ride and cut your losses has always been my motto. People need to learn the basics first such as charting. Alot of people nowadays if you tell them to draw a trend line on a chart they will give you a blank look and say eh? . That is why i advocate Trend Following and Toni Turner's books (especially the trend line chapters) to learn the basics.

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Let the world change you... And you can change the world.

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Machiavelli
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quote:
Originally posted by T e x:
For instance, my good bud Mach loves RSI.

[Big Grin]

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Let the world change you... And you can change the world.

Ernesto "Che" Guevara de la Serna

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permanentjaun
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quote:
Originally posted by Machiavelli:
quote:
Originally posted by T e x:
quote:
The way I see it, even if you're right in the direction of the stock, it can be hard to gauge how far it will continue to move.
is why I say study historical charts...may not work out, but when you find a match...bingo.
There is no reason to sell out of a stock that is in a clear uptrend. I am currently in a stock in a nice uptrend (no i won't name it and jinx myself lol)and if I thought like everyone else at getting out at 5, 10 or whatever % I would of missed the profits I have already gotten. Problem with people is Emotions. They see a pullback they immediately get nervous and panic sell. Let your profits ride and cut your losses has always been my motto. People need to learn the basics first such as charting. Alot of people nowadays if you tell them to draw a trend line on a chart they will give you a blank look and say eh? . That is why i advocate Trend Following and Toni Turner's books (especially the trend line chapters) to learn the basics.
This is all true, somewhat. I don't necessarily agree with there being no reason to get out of a stock in a clear uptrend.

Let the winners run, cut the losers. In building my strategy I'm trying to make it as simple as possible, and eliminating as much emotion from the process as possible. The reason I like the 5% idea is because it is a basic exit strategy. In letting the winner run, what is the exit strategy? It can become harder to build exit strategies that remove emotion. A trailing stop perhaps, but I don't like those. Besides, five 5% plays compounded is more than one 25% play.

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Machiavelli
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quote:
Originally posted by permanentjaun:
In letting the winner run, what is the exit strategy? It can become harder to build exit strategies that remove emotion. A trailing stop perhaps, but I don't like those.

Trailing stop/loss takes the emotion out and locks in your profits if its winner in a uptrend. 5% severly limits you and won't make you profit at it's potentional. Do you think legends like Nicolas Darvas, John Henry, Jesse Livermore, Ed Seykota etc. say to themselves they will cut off their profits at 5%? ... not at all... these guys are millionaire traders many times over because they are trend followers who let their winners ride... I really really suggest you read the book :

Trendfollowing by Michael Covel.

It will totally change your mind and outlook on your 5% idea. My guess is you will chuck that idea aside.

--------------------
Let the world change you... And you can change the world.

Ernesto "Che" Guevara de la Serna

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permanentjaun
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Yea I've read the market wizards books, and understand their trend following ways.

The trailing stop loss is a simple method to remove emotion and follow the trend, but I just don't like it. I don't want to be up 6% on a trade and then it tanks to leave me with only 1%. I don't want to be up 9% on a trade and then have it tank to only 4%. I'm happy with locking in the 5%. It's still possible to make plenty of money off of only 5%.

I'll have to look through the market wizards books, but I don't remember reading any one of the traders saying locking in profits was a bad strategy. The whole idea of the "letting winners run, cutting losers" is just an easy way of saying make sure your money management risk/reward is a sound approach.

Now if I was looking to make 5% on the wins and 20% on the downside I think it might be more of a slap in the face to the famous traders rules. That's why I mentioned I think Pcola has some cajones for the way he/she trades. It works now, but I imagine in the future as he/she has to grow into playing only larger stocks it may turn into a problem.

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Machiavelli
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psssst I didn't say read the Market Wizard books... the book i recommended (Trend Following by Michael Covel www.trendfollowing.com) is a little different then the Market Wizard books and is way more in depth. Do yourself a favor and pick up that book. It's pointless in me trying to explain it here so it is best you pick up a copy and read it. Can't compare it to the Market Wizard books.

Btw I am up almost 200% on one of my trades currently with a stop/loss to lock in my profits currently at 100%. If I had followed your rule of 5% you can see how much in missed profits I would be at.

--------------------
Let the world change you... And you can change the world.

Ernesto "Che" Guevara de la Serna

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