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Strategies & Market Trends : Trading For A Living -- Ignore unavailable to you. Want to Upgrade?

To: Investor2 who wrote (1597)	4/19/1999 7:43:00 PM
From: William W. Dwyer, Jr.	Respond to of 1729

Gosh, more good questions! I do not use mechanical stops, no. In fact, some brokers don't accept stop orders on certain stocks (e.g., Nasdaq stocks). I very very rarely let an intra-day price move stop me out of a position. I prefer to analyze each position at the end of the day, taking the entire day's action into account. I think it's better, better to assess the overall market/sector/group, all the variables in total, then decide whether or not to exit on the next day's open. For example, I have seen too many times when my stock gapped down at the open and would have hit my stop and taken me out with a big loss, but came right back (often within 30 minutes or so) and went back above my stop price. Too many things happen intraday that really are not significant, imho. So, I like to watch for the day and then decide that evening if the stop has been hit for a valid reason and the stock is not likely to recover. I know this sounds crazy, but I think it saves me sometime. I have come to believe that the less I watch intraday price fluctuations, the better I do overall. The only thing that might make me bail intraday if very catastrophic news hits my stock and starts taking it down in a serious way. I mean big deal news, not the usual broker/analyst downgrade, but something that might effect the stock in a negative way and for a long time (months). So, I set "mental" stops and use them as target exit points, just like the target exit points I have mentally on the profit side. I think these mental stops are really the result of my having daytraded for two years, and that's the way those trades are usually played. As far as being flexible and adjusting stops, I prefer to never lower a stop (that can be a bad habit), but I do raise stops as I near my target price or if I feel the market or sector is getting overbought or showing signs of general weakness. This is to protect profits and is a conservative strategy. Bill