Originally posted by AAAintheBeltway
Tony,
Could you elaborate a little on how you manage a typical trade. When you enter what are you looking at to determine if you take a quick profit or let it run (I'm assuming you let a lot of them run since you hold overnight). What kind of stops do you typically use, mental or otherwise? And how do you handle the inevitable gap openings against you, as with SEBL this morning.
Thanks.
Wow, I wrote four books on the subject, where do you want me to start
In short, I bought SEBL yesterday when I saw it on my scanner. I placed a stop loss for the original shares. My price target was 34-37 in two weeks.
Next, I liked the liquidity and momentum on it, so I started day trading it off both the intraday chart with BB and Level II.
The stock closed at the top 10% of its trading range which suggested an 85% chance of going higher the following day, so I held it overnight.
Then came the gap. I used the opening price as a new entry (got to forget where it closed yesterday.) I was going to let it go down 0.50 from the open before selling it. So, my risk at the open was 0.50. Why? Because I could sell it at the open at 29.79 or give it a chance. If my stop is not triggered within the first 45 minutes of trading, I will adjust my stop to the intraday low. Normally, 0.25 below that. Since I had 6000 shares, I used 29.50 in hope there will be liquidity there if my stop would trigger rather than going below 29.50.
If I can watch the trade carefully (meaning I don't have several open positions at the same time) or if the size of the trade is significant for that stock, I use mental stops. If I can't watch it, I use mechanical stops. If the size is not a problem (5000 shares for a MSFT type of stock or 3000 for AMAT type of stock or 500 for MRVL type of stock) I use mechanical stops as well.
Tony
