Take Profits Or Let Them Ride? Why Not Do Both?
Smoke ’em If You Got ’em
As I’ve mentioned in the past: Money management–the use of protective stops, trailing stops, and profit taking–is crucial to your long-term success as a trader. 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).
Let’s follow up on recently mentioned Talisman Energy
(
TLM |
Quote |
Chart |
News |
PowerRating). Based on the
rules outlined in my swing trade primer (as usual, email me if you need a free
copy), notice the stock triggered an entry (a) and then subsequently rallied to
hit the first profit target (b). The protective stop is moved to breakeven
(c)–the same as the entry. As you can see, you now have the potential for a
homerun And, barring overnight gaps, the worst you could do is breakeven.
Earlier today, I went into more detail on the above example
and other examples in my weekly audio/visual presentation. Email me if you need
a link (or click here
to watch).
Best of luck with your trading on Thursday!
Dave Landry
P.S. Reminder: Protective stops on every trade!
P.P.S. Learn my newest and most advanced version of my Bow
Ties Strategy. Click
here for details.