One simple rule that can lead to large returns
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
click here or call 888-484-8220 ext.
1.
Trail ’em If You Got ’em
Many new to trading think it’s an all or none
activity. They think you are supposed to somehow “magically” know exactly when
to exit positions. They think they must exit all of their shares at this precise
level. The truth is, no one knows EXACTLY where a market will go–not even Big
Dave (shocking, I know!). Therefore, you have to trail–lower your stop as the
position moves in your favor and scale—take partial profits. These simple
techniques will give you modest gains on a position that only makes a relatively
small favorable move (i.e. hits the profit target) and then reverses. And more
importantly, they will help you stay with the occasional homeruns.
Remember, Livermore said it best: “It’s the
sitting that makes the money.”
Following the rules outlined in my swing trading
primer (email me if you need a copy), notice how trailing stops would have kept
you in these recently mentioned stocks.
Nasdaq Stock Market Inc.
(
NDAQ |
Quote |
Chart |
News |
PowerRating):
Lehman Brothers
(
LEH |
Quote |
Chart |
News |
PowerRating):
Diamond Offshore
(
DO |
Quote |
Chart |
News |
PowerRating):
I’ll walk you through the above in Wednesday’s
interactive session–see below for details.
On Tuesday,
the Nasdaq rallied in early trading but soon found its high and began to sell
off. It bounced around mid-day but then turned back down again. Finally, it
bounced late in the day, but then sold off hard going into the close.
The S&P put in a somewhat similar performance.
So what do we do?
Obviously, as a card carrying (or at least button and t-shirt
wearing) trend following moron, I have to say that the big blue arrows continue
to point lower. However, the market is very oversold at these levels. Therefore,
trail and scale on existing positions as opposed to initiating new ones. Don’t
worry, on the next bounce, we’ll have a plethora of new stocks setting up.
Wednesday’s With Dave
It’s that time again. On Wednesday 06/13/06 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 (I know I said this last week, but
this week, I really mean it!). 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.