When You Touch Them All

• July 3, 2002
• Duke Heberlein

Most people new to the trading game are under the impression that
professional traders make a great deal of several profitable trades every day,
with few losses. While some may generate staggering win/loss ratios over a short
period of time, the majority of traders generate small winners, some small
losers, then get the one trade that makes their week or month, the “home run.”

 

7-1-2002

15:43:19

SPX Corp. (SPW)
is moving out of the counter trend rally we profiled on Friday. SPW is down
4.42 to 113.08 and is holding a

3-month relative strength rank of 15 from TradingMarkets.com.  

 

 

SPW has imploded since the alert on Monday, losing over 20
points since Monday’s profile. Here is where 2 for 1 money management and a
trailing stop on the remaining shares will maximize the profit potential in the
trade. A professional sits back and lets price take him out, rather than
greedily taking profit. Will a small portion of the gains erode when price moves
back up to the stop’s level? Perhaps. But isn’t that a risk worth taking when
you have locked in a substantial profit?

 

 

The likelihood is that SPW will pull back and hit the trailing
stop. However, it may also fall another 10 points Friday before it decides to
take a pause. Wouldn’t you risk a little profit on paper to grab a lot more by
the closing of the trade? I know I would.

Have a happy and safe fourth of July!

Duke