. . . . . . . . . On Buying and Selling. . . using the Hybrid Trading Method . . . . . . . .
On your long term buys when do you pull the trigger and sell to take profits? Then where do you put the profits?
Good question, Salm!!
LONG-TERM INVESTMENTS
Long-terms are long-terms. . . .I generally buy in October and sell at some point in the Spring. . . .a strategy which has yet to let me down.
POSITION TRADE
Position Trades are often made on Technical Analysis. When a stock or sector begins to turn from its base of support and trends higher, I will take my position. . . .OVER AND ABOVE the long-term position in the same issue.
NOTE: It is imperative that you keep good track of your positions. You never want to "convert" a swing position into a long-term position. . . that is always the wrong move [regardless of how it plays out].
I will then sell my position trade when the stock stalls and turns . . .and begins to trend lower. . .or gets negative news. Often times this happens with tech stocks. . .or the whole market. . .or a sector. Thus, many issues may get traded together on major market turns.
SWING TRADE
I watch for unusual volume and accumulation on our "babies". When I begin to see it, I will often grab up a swing position. . . .[over and above the position and core.] I will sell the swing trade the minute I see the volume or volume rate slow significantly. I will watch my swing position very carefully, as it is based on momentum. I will often trade in and out of the momentum. . . .and may even turn short, if I feel the stock is overextended.
SHORT-SELL
By turning short on the swing, while holding a Position and Core long, it "locks in" my position trade gains [provided both positions are of equal value]. Then when the stock loses its downward momentum, I will cover and walk away. . . .allowing my core and Position Trade to remain long. . . and me to keep the profits made on both the swing and position trades. . . .[I don't worry so much about the core positions. . .they are for selling in the spring only]
MOMENTUM TRADE
Finally, I may "Daytrade" the momentum of a stock, in which I may or may not already hold a swing position. I will do this if the momentum is significant. . . and volume is very strong.
But the single most important thing to remember on a daytrade, is that you cannot turn your back. You set your goal based on the momentum and when you see your gain, you take your profit. . . and if the stock turns south, you immediately cut your losses. Never allow your daytrade to become a swing trade. Often when I see reason enough to sell out my daytrade, I will also sell out my swing. . . or if I see reason enough to sell my swing, I may also sell my position [as I did this morning on RDRT], then wait for a lower price to re-enter my position. . . [which so far has been a successful trade.]
DAYTRADE
It is important to point-out that daytrading the momentum is "Momentum Trading". . . .whereas actual Daytrading is where you study the movements, trades and other idiosyncrasies of a single stock over a long period of time, until you become an expert. Then you move in and out with very large positions. . .hoping to gain an eighth of a point 5 or 6 times [or more] each day. The next day you return to do the very same thing. . . THAT is daytrading. Few [if any] of us here at HOME are true Daytraders.
Where do I put the profits? Generally speaking, near-term profits will get reinvested in longer-term positions.
In other words, if I were to take profits on the swing trade of Harmonic-Lightwave today, I might place the winnings back into say an AOL core position. . . .[which is exactly what I did].
What you don't want to do is to return too often to the well!! If the momentum is drying up. Walk away from swing and other momentum trades. . . unless you are wishing to play short.
Hanging out too long is perhaps the single most common mistake that newbies make when their stock gets momentum.
It is important for you to . . . .
ProfitOften!
Rande Is |
