Stock did not confirm upward trend so nothing was initiated today. We had price target of 58.20 and it only got to 58.16 and then sold off. This is how to trade on momentum. We keep it on our watchlist.
If you initiated a trade on this today, you’d just be guessing. Hope this helps show how/when to initiates trades for improved success.
I don’t mind taking some requests if anyone has a question on a chart. I could at least show you what I look for and others like Pete can also share input. There’s some knowledgeable guys here and it’s all very interesting to see technique. [Reply]
Originally Posted by lewdog:
WWE made a move today. I got in 58.20.
Okay. So you have a stop order of 2.7%.
Since the high for the day was 59.53, does this mean that your 'floor" stop order price is now 57.92? Which would mean your potential loss would be 0.5% at most? [Reply]
Originally Posted by Coogs:
Okay. So you have a stop order of 2.7%.
Since the high for the day was 59.53, does this mean that your 'floor" stop order price is now 57.92? Which would mean your potential loss would be 0.5% at most?
The initial stop I set is a hard stop set at a certain price determined by the stocks recent low's before a possible trade initiation. In this case the buy price was 58.20 and the initial stop was set at 56.60 for 2.7% risk. This stop is raised if the stock continues to go up but is then determined by it's new movement, and many times set at intraday low's, so the percentage only matters for initiating the trade. It has no meaning after the stock moves up as the goal is to maintain capital and decrease downside risk. Today the intraday low was 56.98. Instead of targeting the exact intraday low I take that price and multiply it by .999 to set my new stop loss right below the intraday low. So this would be 56.98 x .999 = 56.92. I am now at 2.2% risk compared to my purchase price.
If you can build in capital risk management strategies by using defined rules, with a win/loss ratio of 2:1 (8% winners, 4% losers on average), this system still provides profit even if you're only 50% accurate in your trades. It's called "built in failure." This also only works if you track every trade so you know how successful you are doing in your trading. Most investors subconsciously lie to themselves about how successful they are at "winning" trades.
When the market was whip-sawing in March-April, many of my trades were 3-4% winners, while I was able to tighten up my stop losses to 1.6-2%. I was still able to maintain a 2:1 ratio of winners to losers and made profit even though my trading winning percentage was only 47% those months. [Reply]
Originally Posted by lewdog:
The initial stop I set is a hard stop set at a certain price determined by the stocks recent low's before a possible trade initiation. In this case the buy price was 58.20 and the initial stop was set at 56.60 for 2.7% risk. This stop is raised if the stock continues to go up but is then determined by it's new movement, and many times set at intraday low's, so the percentage only matters for initiating the trade. It has no meaning after the stock moves up as the goal is to maintain capital and decrease downside risk. Today the intraday low was 56.98. Instead of targeting the exact intraday low I take that price and multiply it by .999 to set my new stop loss right below the intraday low. So this would be 56.98 x .999 = 56.92. I am now at 2.2% risk compared to my purchase price.
If you can build in capital risk management strategies by using defined rules, with a win/loss ratio of 2:1 (8% winners, 4% losers on average), this system still provides profit even if you're only 50% accurate in your trades. It's called "built in failure." This also only works if you track every trade so you know how successful you are doing in your trading. Most investors subconsciously lie to themselves about how successful they are at "winning" trades.
When the market was whip-sawing in March-April, many of my trades were 3-4% winners, while I was able to tighten up my stop losses to 1.6-2%. I was still able to maintain a 2:1 ratio of winners to losers and made profit even though my trading winning percentage was only 47% those months.
