Quote from MrDinky:
Enjoying your journal (just in case you were worried no one was reading it.) Would you mind explaining your exit/stop criteria - especially for those positions you hold for a long time? I'm surprised you didn't exit DRL after it shot up on the 14th.
Hi MrDinky,
(I never thought that I would address a letter to a Mr. Dinky.
)
Thanks, glad you're enjoying this journal.
Regarding DRL:
6/27/03..... Long 200 DRL 45.10
7/07/03..... Sold 100 DRL 47.00.....profit of $1.90
7/15/03..... Sold 50 DRL 50.48.......profit of $5.38
(Presently at 47.84.....profit of $2.74)
I am being consistent with scaling out of my profitable trades. So I realized a profit of 1/2 of my open position on the 15th. I wanted to leave some on the table. I didn't want to take myself out of the trade.
I don't regret my decision.
At this point, my worst case scenario stop is breakeven, although I'll probably get out of the trade before that.
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Regarding Exits and Stops: (I copied and pasted some things from some of my prior posts)
I predefine my risk. I Make sure that the maximum expected loss is worth risking for the potential minimum profit.
My maximum expected loss is some area below a weekly or daily swing low.
I'll start my first scale out at the minimum profit potential area.
If the trade stalls and the circumstances change I will get out earlier. I'll always play towards the safe side.
I also have a rock hard stop, which is the most that I'm will to lose on the trade. (that amount is the same as my maximum expected loss). If it trades there, I'm out no matter what. I call that my back-up parachute. If for some reason my regular parachute doesn't get me out, the back-up parachute surely will.
I also do not hesitate to take my losses. When my premise becomes invalid, I get out without hesitation. Whether it's a profitable trade or not.
I will scale out of the trade when it is profitable. I want to "claim" some money.
I don't have any control over what the stock's gonna do, but I do have control over what I'll do in relation to how the stock acts. I'll close the position.
I would rather close the position early, and have a relatively small loss than close it after the weakness is obvious to everyone and the stock free falls, which will give me a large loss.
I'm just trying to be very patient. I also don't want to think that I am smarter than the market. If the stock goes against me and proves that it's not cooperating to my plan, I will get out, cuz my plan will never override the market's plan.
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So Mr.Dinky
...(no offence, but your name does make me smile...)
Basically, there is no one indicator or "thing" that I look at that will get me out of the trade. I'm just letting my market experience guide me.
I become more and more experienced each and every day, and that experience will influence the decisions that I'll make the following day.
I'm always willing to learn. I won't make drastic changes to my strategy, but I will slowly incorporate them in over time.
I hope I kind of/sort of answered your question. If not, ask again and I'll try to be more specific.
Thanks for the question,
gotta_trade
