Stops:
A variety of ways, but which to use can be best determined by studying the stock and its trading patterns over time..
1. Below or Above 30 period envelope channels
2. Below or above 30 period bollinger bands
3. just below previous day low or above previous day high
4. Below the 20 day simple moving average
5. 3 to 5% below entry(Jeff Cooper, I believe is such a good timer that he sets his at 1%)
Timing is everything, you got your timing down, you should be taken out for scratch or a profitable trade as you move up your trailing stops
6. Below or above large areas of volume from the past, a breakout point would be good...
7. If you believe in a stock longer term, you could just put
in a catastrophic stop..Example on DROOY it would be set at about 1.75....Think that was where it gapped on its first big move at 3.00...
8. There are so many other methods, one I have to look into my notes now, about averaging out the previous day high, low, and close...etc..
Remember: The Market maker knows twice as much as you about trading patterns and stop setting...He sees them all...Example..On PVAT he knew the neckline was at 3.00, and that many rookies would put their stops right under 3.00, after the breakout...So he comes back a day or two later on light volume, takes out the stops, and eventually moves the stock up...You have to outwit them, and that is the fun of trading...I had a stop set on PVAT at 2.50 when I was in it..A catastrophic stop... |
