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Strategies & Market Trends : Swingtrading - Tricks of the Trade -- Ignore unavailable to you. Want to Upgrade?

To: Brandon who wrote (50)	10/5/1999 5:21:00 PM
From: $Mogul	Respond to of 551

Well DSCM has done verry well and should continue, as it is the leader if the mkt. holds. Bill Gates wife is on the Board of Directors.

To: Brandon who wrote (50)	10/5/1999 7:09:00 PM
From: Brandon	Read Replies (1) \| Respond to of 551

Unfortunately not all gaps are favorable. When gap occurs that is not favorable you need a plan in place that will help you to deal with this situation. One of the dangers of holding overnight is the gap that blows your stop on the very first trade and there is nothing you can do about this. They will happen a few times if you hold things overnight. Your first reaction is probably to say "oh my"...or something to that effect. "My stop is blown, I must get out right now". In most cases that is the worst thing you can do. Why? Are we not supposed to keep our stops? Yes you are. But this is a special case, calling for special rules. My first rule of trading is to always follow the rules. My last rule is know when to break them. This is a case where we bend them. Here is our case scenario and action. We are long XYZ from 45 1/8, our stop is at 44 1/4 and the close was 45 3/8. All looks nice at the close so we take the position overnight. For whatever reason the next morning the stock gaps down to 43 15/16 on the first trade on the next morning, which exceeds our stop. Here is what we do: 1st..Dont panic. The world is not over yet. 2nd..Sit on your hands and do nothing for the first 5 minutes of open trading. Mark the low. This may be the hardest thing you have ever done, but it is a must. Most gaps fail, remember you have that on your side. 3rd.. If the 5 minute low is violated get out of 1/2 of your open position. Sit on your hands again. 4th..Mark the 30 minute high and low in your stock. Both are important. If this 30 minute low is violated you must get out of the rest of the position. Now remember we are watching the 30 minute high here as well. Brandon www.mtrader.com/swingtrade