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Strategies & Market Trends : Trade What You See, Not What You Think -- Ignore unavailable to you. Want to Upgrade?

To: LemonFlavor who wrote (844)	12/18/2001 7:06:04 AM
From: Threei	Read Replies (1) \| Respond to of 867

LF, here is my method of stop placement and trailing. Let's say stock moves in a range 19.75 - 20 and I intend to buy break of 20. My initial stop is right under support, 19.75. As stock breaks 20 I don't move the stop to b/e right away as move 3-5 - 10 cents is not really indicative yet and stock can easy pull back to 19.90 without losing upward momentum. When it comes to the next resistance, let's say 20.25 and pauses there with slight pullback I move stop to just under break level, 19.90-.95. As next resistance is broken and stock moves to 20.50 I trail stop to 20.20 - again, right under last support (former resistance). It can be and usually is combined with scaling out. I do not take commissions into account during this process - logic of stock movement does not consider your personal circumstances, and trade should be built on this logic of the movement. If commissions structure and risk tolerance dictate different math it should be regulated by shares size but not by changing of play structure. General idea is, stop should take you out of the game if game has changed - in other word, reason for your entry ceased to be valid. If you are long and stock has broken the support, play is no longer valid. Best regards, Vadym