Thanks Lee appreciate your comments. Yeah your observation about being ready for "Very Bad News" is spot-on, and timely. For example, on Thursday this past week JNPR was hit with some pseudo-news mid-session - claims their CFO had said something (new guidance) at a financial conference (actually, it was a recycle of something they'd said before). I had bought a pullback in the 5/60min timeframes looking for some follow-through from the Wed rally so was long JNPR with a stop when that hit. I also happened to be out on a running break during the doldrums. There was a little slippage when my standing stop was hit but it got me out in the $58 area while the stock collapsed to $55 (then $53) the same day. Could have messed up the week, but instead no problem -- that's why we recommend always have a standing stop order working, even if you plan on exiting with a mental stop and the standing stop is further away. We also recommend staying in front of the screen when you're not flat, but darnit after 9 years of this I still feel the need to take a short doldrums break sometimes ;)
One of the reasons I like the breakeven stop so much is, I trade the most volatile tech high-flyers pretty intensively... if you can get into a stock like JNPR, VRSN, BRCD, EXTR, BRCM, AMCC, JDSU, SEBL etc and work your stop to breakeven then manage your trailing stop in a fashion that lets it run, wonderful things can happen. We did that this week with JNPR, risking less than a point on the entry, and took 6 points out of it. In my prior moderating gig when the market was trending down (fall 2000), we had some 100+ point weeks trading that way on the short side. The other essential key is to do your homework the night before, so you have your entry points ready and alerts set... and to only enter when the risk:reward is strongly in your favor (tight stop point).
Thanks for visiting and the insightful comments
-Steve |
