The best way to improve your trading
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
Today in my weekly interactive lesson, I discussed some discretionary
techniques that can help to improve your performance. Let’s review.
Handling Gap Entries
Many times an opening gap can be the high (or near high) for the day. Stocks
often quickly reverse from these situations. Therefore, blindly entering on an
opening gap could be a bad idea (reminds me of the “Bad Idea” jeans).
Below is a bit of a “no brainer” situation. The stock gaps opens and
quickly reverses. Even though the entry triggers, this position should be
avoided. A “second entry” could then be placed above the opening range
(i.e. intra-day high).
Now suppose a stock gaps open and keeps on rallying. This requires a little
thought. You now have to make a “go” or “no go” decision.
More importantly, you then have to live with that decision. If you buy,
then you run the risk of buying the high tick of the day. If you don’t buy, then
run the risk of missing a big wining trade since stocks sometimes trigger and
never look back.
Managing A Mental Stop
Here’s another discretionary technique. Suppose you have a level you
will exit a stock (at the market) if wrong. In other words, a “mental”
stop. Now suppose the market gaps through that “stop” (a). If
the stock continues to drop, then you HAVE to exit. However, if the stock
quickly reverses (b), you might want to stick with the position and use the
intra-day low for your new stop.
I discussed the above in more detail along with market and sector conditions
earlier today (03/15/06) in my weekly interactive presentation. I also fielded
questions on general trading and individual stocks. Further, I sang some
Wiggles’ songs. Email me if would like a link to this (and/are the
archives for the past 2 years) or click
here to view it.
Best of luck with your trading on Thursday!
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.