DAYTRADING Fundamentals Message Board

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Strategies & Market Trends : DAYTRADING Fundamentals

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To: - who wrote (418)	6/10/1999 8:37:00 AM
From: AI Master	Read Replies (1) of 18137

Learning how and when to exit a trade is probably the hardest thing to grasp. Your post was excellent. I hope what I provide below can add to (or reinforce) your exit strategies... Knowing when to buy is only half the battle of becoming a successful trader. Knowing when to exit a trade is equally important. One of the hardest things to realize as a new trader is to never never never get emotionally attached to a stock. After you enter a trade, always place a stop loss order. Place your original stop loss at ½ basis point from your entry price. You can put your stop loss any place you feel comfortable with but never lose more than 5% on any one trade. This strategy will help you avoid losing your shirt. Never let a trade languish for more than 5 trading days. If you enter a trade and the trade does not develop after 5 trading days, exit the trade. There are too many good trades out there to get stuck in a none-mover. Low commission rates, especially those offered by online brokers, have made this technique possible. Place a breakeven stop loss once you have attained a ½ basis point profit on your trade. Make sure you use the bid price on stocks you are long and the ask price on stocks you are short to determine where to place your breakeven stop loss. This step can help reduce your number of losing trades dramatically. Consider taking some money off the table once your trade has produced more than a 1 basis point profit. Sell ½ your position at this point in your trade. Also place a breakeven stop loss on the remaining ½ of the trade. If your trade makes it to this point, you are guaranteed a profit. This one little step guarantees you of not letting a winning trade turn into a losing trade. At this point, the pressure is off and the trading becomes fun. If the trade continues to move in your favor, simply adjust your stop loss for every ½ basis point move in the stock. Some brokers will place a trailing stop loss on the trade for you. Others will require you to do this step manually. Now just sit back and watch your profits grow and grow and grow. This step will help maximize your returns. Good luck and happy trading! Rocky

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