timaru69 said:
Hi Gadgetman
I've noticed that the big runs don't happen that often in the evening and am thinking of changing my approach to targeting 40 to 50c moves.
Tonight for instance traded APPLE twice , once long at around 19:15 for a breakeven trade and another short around 20:05 which went to a 50c profit at one stage and then came back , I got ot with about a 12c profit.
With both trades I was looking for a decent run but ended up with peanuts.
Anybody got any thoughts on this?
Cheers
AC
Hi Timaru
There are a few factors here that, IMO, you must take into account, but taking profits is probably one of the most difficult things to master. I too yesterday managed only to make a small profit so don't think you're alone.
1) Is your account yet in profit?
It's no good looking for home runs when you are yet to bank a profit. Don't hold a trade hoping to squeeze out every cent. Manage your account and take some small moves. This helps pyschologically with the next trades.
2) What is the overall market doing?
Trending, choppy etc. Helps to have the futures charts, in the same timeframe on your screen at the same time. If the futures quickly reverse, then I would be looking to see how my stock behaves.
3) How is your stock behaving with the market?
Is your stock weaker or stronger than the market? If the market is down and your stock is a lot weaker, then it may carry on trending down.
IMO I think this is key when looking for longer moves. Also, if the stock has a major story behind it then I will look for a longer move.
4) Become mechanical when exiting
Have some rules that you can apply when you feel like your trading is not going so well.
I have a number of styles I like to use. The first is my discretionary style. I will be analysing lots of information before the open and during, I will be looking at different timeframe charts, futures charts, seeing how they move together, is there a rhythm? I will be analysing candlestick patterns on both my 5min and 1min. What do my moving averages tell me, are they flat, trending etc. This style is intuitive and comes with experience.
My second style is if things are not going so well. I will become mechanical. I have a set of exit rules and will follow them no matter what. I had to employ these last night as took a few losses earlier on and had to adapt in order that I didn't blow up.
My third style is momentum scalping. I will be looking for quick small moves.
This is very good to restore confidence and allows you to participate in the market with minimal risk and the probability of being hit hard is extremely low. But timing is key for entry.
5) Have a target in mind (relative to the stocks volatility)
After analysing the range of what your stock can do in a 5min period for example (use 14 ATR) to get an average, then consider a likely target. If it can do 50 points no trouble in the space of 3 or 4 candles, then 50 points is your MAXIMUM target you may wish to take. Don't by any means keep holding and hoping that you will get your 50 points. If it starts to dither, then scale out.
Also important is the range that it has already done in that day and what is has done in the past. Important when looking at gappers.
6) Scale out
If in doubt scale out. This way you can bank some money and let the trade run with a stop at breakeven.
Thats a few of the things I think about, but I stress that managing your account is paramount.
p.s. A couple of quotes I like and have them printed above my screen
1. We will never trade perfectly
2. Be content with nice winners
3. Be aware of potential exits all the time in a trade
4. The best traders exit positions too early and always love to ring the cash register
5. Losing traders are guided by fantasy and fear of losing
6. Winning traders are guided by confidence
7. A few good trades can make your week
Hope this helps
Lee
