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Strategies & Market Trends : Stochastics -- Ignore unavailable to you. Want to Upgrade?

To: breathe who wrote (923)	2/17/2000 12:29:00 PM
From: jkwtrade	Read Replies (1) \| Respond to of 927

Breathe: Above 80 From an absolute safety perspective you should not buy above 80. Depends on risk tolerance and capital reserves. However, many times stocks have further upside potential above 80. To determine if they still have legs look for an increasing macd, i use iqc default settings. Keep in mind the macd does not have to be in positive territory but simply increasing. Furthermore, if %k is above 80 and the %d is not it may still have momentum. A cheap way to protect yourself when going long on an issue above 80 is to purchase cheap out of the money puts. If your stop loss is hit on the stock, your puts should help you recoup some if not all of the loss. If the stock rises to your profit objective, you have only decreased your profit marginally. Risk and Return. Options hedging is tricky. I've traded professionally for the last 3 years. I have only in the last year become proficient at hedging with options. If you are not familiar with options already, I would not recommend a hedging strategy until you become very familiar with calculating delta values. Continued Luck, J. Kelsey