Should we have targets in swing trading?

[neutrino]

Let's say you expect a stock, that trades at 50, to reach 55 within a week. You buy the stock and put a stop at 48. The stock touches 55 after 3 days. Do you sell?

 

[kgharris]

Quote from neutrino:

Let's say you expect a stock, that trades at 50, to reach 55 within a week. You buy the stock and put a stop at 48. The stock touches 55 after 3 days. Do you sell?

If you have a target based on a technical reason (previous high/resistance, Fib extension, MA resistance, etc.) - yes. You can always re-enter if it sets-up again.

If you arbitrarily picked a target (which I would never do!), I would use a trailing stop.

 

[lindq]

Quote from neutrino:

Let's say you expect a stock, that trades at 50, to reach 55 within a week. You buy the stock and put a stop at 48. The stock touches 55 after 3 days. Do you sell?

Pigs get fed, hogs get slaughtered.

 

[gms]

How do you reconcile the above answers (not saying they're wrong) with the adage "let your winners run"?

 

[MYDemaray]

These are questions I struggle with all the time. I've tried to test different scenarios on tradestation: take profits, take 1/2 profits, trail stops and still have nothing conclusive. Many times the results are very similar. Anyhow, would be interested on others thoughts here. Obviously, a large portion of this can be psychological for some people. Great discussion.

 

[lindq]

Quote from gms:

How do you reconcile the above answers (not saying they're wrong) with the adage "let your winners run"?

That's a good question, but it goes to the issue of what "run" is. In my mind, a 10% gain in a few days qualifies as "run", especially if one is trading a system that maximizes profit at that level. If you are trading a system that specifies an exit, and you elect to extend beyond that exit, then you are, by definition, into an area of increased risk. So basically what I am saying here is that for a system trader to let his profits "run" is not in general a wise thing to do. God knows I've left a tremendous amount of money on the table by taking profits at a predetermined level. But that's the price of a system. Hit singles and doubles, and let the homeruns go.

 

[prox]

Only if it's derived off something known to show accuracy, like Fib projections.

 

[lindq]

Quote from prox:

Only if it's derived off something known to show accuracy, like Fib projections.

Fib projections are known to show ACCURACY for selling signals?? On what planet?

 

[kgharris]

Quote from lindq:

Fib projections are known to show ACCURACY for selling signals?? On what planet?

On my planet, for one.

Almost all my sell signals are based on Fib projections (extensions), or a combination of Fib projections and other resistance.

My accuracy rate is pretty damn impressive, if I don't say so myself!!!

 

[lindq]

Quote from kgharris:

On my planet, for one.

Must be a pretty lonely planet! What do you do for fun?