Quote from omegapoint:
Thats the kind of advice I'd pay for. Thanks. The thing about stops though, I've read that entering your stop sets you up to
have them hit just to get you out and that mental stops, if you stick with them are advisable. what do you think?
Mental stops, unless you are highly experienced, are very difficult to employ. It's too easy to play games with yourself. And with a fast-moving stock, by the time you reason with yourself and execute the order, you're often in the dumps.
If you set a stop order with your broker, and not a stop limit, the order typically is not seen. When hit it will turn into a market sell order, which for me is superior anyway to a limit, as the limit can get passed by in a sharp correction.
If you are interested in buying pullbacks, I recommend reading "Techniques of Tape Reading". The review is on this site.
Vadym really nails what you need to look for in buying into capitulation.
You need to be as certain as possible that sellers have exhausted themselves, and that the coast is clear to enter. Patience is very important, waiting for the right setup.
Once in the trade, set a tight stop, just enough breathing room for a natural amount of movement, but not too much in case you misjudged entry. When the stock starts to move, bring your stop up to even as soon as possible, then let the stock rip. Also very, very important to keep an eye on the overall market to get it behind you. Ideal situation is an overall market pullback, setting up the capitulation entry. Then jump on it as the market recovers, even slightly.
Take a decent profit but don't get greedy, or it will reverse on you.
Good luck.
