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Strategies & Market Trends : The Final Frontier - Online Remote Trading
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To: nshul who wrote (556)10/21/1997 12:39:00 AM
From: TFF  Read Replies (1) of 12617
 
Nshul: first, I buy a stock I GUESS will go up (if I KNEW - I'd be the wealthiest man in the world!)

Why did I buy the stock? what did I expect the stock to do once I bought it? where is my stop loss for the stock? How many shares did I buy? what price?

Let's assume the price is $30 per share, and I bought 1000 shares. I would set a stop at 2% of the value of the trade (typical stop for me)
So at $29.40 I have a stop loss order in.The reason I bought the stock was because it was at the bottom of a channel in an uptrend. I expected the stock to drift on light volume and shortly after make a run in the opposite direction.

Now, assuming the price action you say, I would be concerned about the high volume and consider getting out of the trade regardless of the fact it has not hit my stop loss. The reason? because it has done something I was not expecting - trade actively at lower prices.

I was wrong in my thinking and the support level at the bottom of the channel may have been broken. very good reason to exit the trade.

obviously there are other circumstances which may alter my decision, such as if the broader market had briefly turned negative during this period.
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