How to control risk and stick with winners
Dave Landry is principal of Sentive Trading, a money management firm, and a
principal of Harvest Capital Management. Mr. Landry is the author of two top
selling books,
>Dave Landry’s 10 Best Swing Trader Patterns And Strategies and
>Dave Landry On Swing Trading.
If you would like a free trial to Dave’s Nightly Swing Trading Alerts Report
Trail ’em If You Got ’em
As mentioned ad nauseam: money management is crucial to your success as a
trader. A simple way to protect yourself and stick with a winner is through the
use of protective stops–a place you will exit if wrong and trailing
stops—as the stock moves in your favor, you move the stop a
similar amount.
Let’s take a look at the NII Holdings
(
NIHD |
Quote |
Chart |
News |
PowerRating) and the Index ETF
shares, mentioned on Friday.
Here’s NII.
The S&P Holders:
The Dow Holders:
And, the Nasdaq 100 Holders:
Notice that the protective stop is moved lower as the position moves in your
favor. This is known as a trailing stop.
Does it always work this well? Of course not! That’s why we have to use stops. I’ll cover this in more details in Wednesday’s
interactive session. See below for details.
If you’d like to know more about money management, I have a primer on swing
trading. Email me if you need a copy.
On Tuesday, the Nasdaq sold off hard out of a pullback from
lows for a solid trend day lower.
Ditto for the P’s.
So what do we do?
On cue, the market sold off hard out of a
pullback from lows (no, it’s not always this easy). This has the market quickly
becoming oversold–again. Therefore, use caution on new shorts and trail and
scale (lower stops and take partial profits) on existing positions.
As far as setups, Nasdaq Stock Market
(
NDAQ |
Quote |
Chart |
News |
PowerRating) looks poised to
resume its slide out of a pullback from lows (gees, wonder if I’m going to start
getting crappy fills starting tomorrow?).
Wednesday’s With Dave
Same bat time, same bat channel, and same bat intro as last week: It’s that time again. On Wednesday
05/31/06 at 11:00 AM EST, I will be hosting my weekly interactive lesson.
There’s so much going on, I don’t even know where to begin. Namely, we’ll talk
about this market. I’ll also cover recently mentioned stocks, sectors, money/position
management, psychology, etc… Again, way too much to mention! I do promise to save some
time to take your questions on
individual issues or trading in general. As usual, admission is free (and I give money back guarantees if not completely satisfied!).
However, the space is limited by the software. Email me if you need instructions on how to join (the same each
week) or if you would like the archives for the prior year (covering topics such as money & position management, scanning, picking the best setups, sectors, longer-term trend following and a plethora of other stuff).
Best of luck with your trading on Wednesday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. If you would like a free
trial to my trading service, click
here.