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Strategies & Market Trends : Strictly Buy and Sell Set Ups -- Ignore unavailable to you. Want to Upgrade?

To: hubris33 who wrote (8953)	4/7/2006 4:25:35 PM
From: chowder	Respond to of 13449

>>> How does one pick the profit targets? <<< There are a couple of ways, you've named one. Look for price resistance. This is often how profit targets are picked on reversals. Then comes the measuring rule. When you look at this weekly chart of WAB, note the break out point. The break out point is now new support. The 10 week consolidation range, after the wide range break out, is about $5. Once price breaks out to the upside, we can reasonably expect it to trade another $5 to the upside. Using a margin of safety, I cut the first profit target back to $4.00. If price can have a strong move to the upside, I assumed we could double the size of the consolidation range ($5) and double that, making $10 the second profit target. I will be raising stops as I go but, I will allow room for the trade to develop, if the trade should trigger. stockcharts.com[h,a]waclyiay[d20050407,20060407][pb20][vc60][J73898346,Y]&listNum=1 >>> Then coupled with that how does one know the time period of the trade? <<< Since price will be breaking out on the weekly chart, I will take a longer term position. If price were breaking out on the daily chart, and not the weekly, I would take a short term position. Sometimes, the size of the position will determine the time frame. Keep in mind, every long term trade represents 5% of my total capital. Every short term trade represents 10% of my total capital. Sometimes, if I feel very good about a weekly chart set up, I may want to increase the size of the position. Increasing size increases total risk, and when I increase risk, I shorten the time that my capital is at risk. So, I would go for a swing trade, and after locking in profits at the first profit target, I could always change the time frame that the remaining position will be held. >>> The FFIV was a 2 day trade <<< The chart set up dictated this. You had a stock that sold off strongly, forming 2 wide range bear bars. This type of selling will often see shorts beginning to take profits, and then you always have the novice trader who buys dips like that because they don't know how to properly buy dips. As it was, the upside lasted 2 days. >>> while the DHR was a 'swing' trade, <<< DHR could have been a long term trade. The amount of money at risk was what determined that I make it a swing trade. I liked the daily pattern enough to want to take a larger position. Taking a larger position puts the trade in a short term time frame, to minimize the amount of time my capital is exposed to market risks. >>> How do I decide which is which when I find a chart like SLW or KRY? <<< SLW had a nice daily set up and did not have a weekly buy set up. This makes it a swing trade until it can prove otherwise. KRY had a nice weekly set up on the charts at the time of your inquiry. This would have dictated a longer term trade. By the way, excellent choice in KRY. Good job! stockcharts.com[h,a]waclyiay[d20050407,20060407][pb20!f][vc60][iut]&pref=G dabum