Your stock is called to open sharply lower: Quick! What do you do?
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
They’re aren’t many guarantees in trading. However, I can guarantee
is that sooner or later a stock will gap strongly against you. So what do you
do? Well, if you are disciplined, then you might be able to improve your exit or
in some cases, actually still profit from the trade.Â
On bad news (or more accurately, news that is perceived as “bad”),
stocks can gap sharply lower. However, many times this gap can be the panic low
(or near low) for the day. The stock then promptly reverses and rallies. In some
cases, the stock can actually close higher. Knowing this phenomenon, you can
enact a damage control plan. Here’s how:
You pull your stop, wait to see if the stock quickly “finds its
low”, and then replace that stop below its intra-day low. You subsequently
look to “trade out” of the stock for an improved exit. This is
illustrated below.Â
Again, this takes DISCIPLINE. You have to have an “uncle point”–a
point where you will exit the stock if it continues to drop. If you’re going to
sit there like a “deer in the headlights” then you’re better off just
letting your stop get hit. Â
I covered the above in much more detail, along with current market conditions
during my weekly interactive audio/visual presentation. Click
here to view it or email me if you need the (free) link. Also, email me if you would
the recording to this and sessions for the prior year (covering subjects such as
money management, position management, entries, damage control, scanning
etc..).Â
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.