Anyone Can Put A Trade On
So far, the market has responded
well to our Fibonacci price support zones, time cycles, and patterns that we
discussed in the last column. What I find interesting about these setups is
that many people will recognize the exact same thing that I pointed out. In
fact, many of us probably put some long trades on at the same point.
However,
a much smaller percentage of us will actually make good decisions about how
to take the trade off. See, some will be shooting for the moon on these long
trades and hope for that “one trade” to get them back in the game or to make
them independently wealthy. Others will be so excited that a trade went in their
direction that they will exit before the market even has a chance to provide
a good profit. Ah yes, we’ve all been there. I know I have on more than one
occasion.
That said, the way I manage
positions once I’m in is almost strictly based on Fibonacci levels. On the charts
of SPY, QQQ, and BBH, you will see areas where Fibonacci price resistance zones
come together. Those are areas that I will take partial profits and trail my
stop.
For example, with BBH, I took about one-third of my long position off
today against this first resistance zone from 81.59-82.87. I’ve also moved my
stop up to reduce my risk in the trade. My next objective on BBH (assuming we
don’t violate the September 20 low) is 87.06-88.66. At that point I will have
two-thirds of my position off the table and my stop will be high enough that
I am not risking any of the original trading capital. Then my final objective
on this swing trade is up around 98.50 which is the 1.272 extension of the corrective
swing from August 22 to September 20.
I’m not saying my way of
managing a trade is the best. It works for me. The thing I suggest you have
in place before putting a trade on is how you will take it
off.
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Good night!