How to be a longer-term trader with better entries
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
at=st”>click here or call 888-484-8220 ext. 1
An Intermediate-term Trader With Better Entries
I’m “slotted” as a swing trader. I guess this is because I
used the word “swing trading” in the title of both of my books.
However, I really like to see myself as an “intermediate-term trader
with better entries.” My goal is to be right over the short-term, take
partial profits, and then hopefully continue to participate in a longer-term
move. This is accomplished through the use of somewhat looser stops
as the position continues to move in my favor.Â
Let’s follow up on Autozone
(
AZO |
Quote |
Chart |
News |
PowerRating) from my 09/27/05 column. As
mentioned in the past, a simple money management system is to take at least half of your profits when they are equal to or exceed your initial risk. You then move you protective stop on your remaining shares to breakeven. This way, barring overnight gaps, you have a “free” position that has the potential to turn into a homerun (through the use of trailing
stops). Following the rules outlined in my swing trading primer (email me*
if you need a free copy), notice that the stock triggers an entry and then
quickly sells off for a nice “swing” (i.e. short-term) move to hit the
initial profit target. Partial profits are taken and the stop is then moved to
breakeven–the same as the entry. Notice that the stock continues to move in the
intended direction (a). You now have the luxury to use a somewhat looser stop.
This allows you to continue to participate in a longer-term move.Â
I’ll walk through this one on Wednesday in my weekly interactive audio/visual
presentation.Â
Housekeeping
*I answer all emails but have been a little backed lately. Thanks for your continued
patience.
On Friday, the Nasdaq nicely firmer but then chopped back and
forth for the remainder of the day. This action has it closing just about where
it opened. .
The S&P put in a somewhat similar performance. Â
So what do we do? The media celebrated last Wednesday when the
market rallied. They seem to put out the “all clear”–signally that
this was the bottom. Me? Well, you know me, I’m a trend following moron
who uses big blue arrows. One day doesn’t make a big difference. If the market
continued to follow through to the upside, I may have changed my tune. However,
it didn’t. On Thursday it gave back all of its gains and then some. Friday was a
“do over.” This action suggests that the big blue arrows remain
intact. Therefore, continue to avoid the long side. On the short side, continue
trail your stops lower on existing shorts, take partial profits when offered,
and keep an eye out for new positions. In the commodities, watch for
opportunities in metals & mining, utilities, and the energies. In
technology, the semis and telecom remain in sharp downtrends. And finally, now
that bonds have begun to pull back again, interest sensitive areas such as the
REITS and Mortgage Investment should begin setting up again soon.Â
No setups tonight. We should see setups next week if the market continues to
pull back.Â
Best of luck with your trading on Monday!
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.