Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Rational Analyst -- Ignore unavailable to you. Want to Upgrade?

To: Scott H. Davis who wrote (1681)	9/12/1999 11:27:00 PM
From: HeyRainier	Read Replies (1) \| Respond to of 1720

The answer unfortunately isn't so simple. On occasion, I behave like Dave by exploiting price imbalances even though trends are against me (e.g. selling against strength/overbought levels), but when the opportunity to re-enter and lower my cost-basis arrives, I might step back in if I still like the stock. The moving average I would use will depend on a number of factors, such as: (1)My profit/valuation target: this is the level I will have decided to take the money off the table entirely, regardless of what may happen in the future. If the stock is accelerating beyond this point, I will be a pig and attempt to extract an excess return, but adjust by moving the MA to trigger at a faster point. (2)General market conditions: It's a good idea to move with the market. Fighting its direction will pose additional risks to your portfolio. If the whole market is tanking, it will likely only be a matter of time before people figure out that your stock is the only one making money. An interesting thing happens at this point. (a) people lock in profits and drive the stock down along with the rest of the market, or (b) people realize that it's the only game in town, and drive the price even higher. "(b)" happens less frequently, but it is indeed strange. With regard to the general market: if I see something that will negatively affect the market, I may not even wait for the MA to trigger, and sell on the spot. (3)Stock price acceleration: the quickness of the trigger should be adjusted according to the rate of acceleration in the stock. I believe this is the most important factor. That will be up to you to decide. (4)Your risk tolerance/greed factor: If you can handle a stock pulling back, ebbing and flowing, you might want a longer term MA to keep you in the trend. After many a brief pullback, stocks may often reach their old highs and exceed them. There's lots of factors to consider, and only you can answer them. Trade with your comfort level. RT