Trading Video – Booking Partial Profits
Here’s another video of a trading lesson I learned in the market today.
There are always lessons being taught to us by the market…some of them are new, while others are reminders of lessons past. Every one of them are important, so let’s examine one today regarding booking partial profits.
The aim of every trader should be to minimize risk, maximize reward, and seek out every opportunity to increase the odds of success for each trade. Today’s video shows one way I do that by taking a look at a trade we initiated on Tuesday over at TheStockBandit.com.
Feel free to share it if you’re a fellow blogger, the embed code is on the YouTube page.
Without further delay, here’s today’s video. Enjoy the show!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Swing Trading, Trading Video, Investing[/tags]
Suzi | Apr 3, 2008 | Reply
Jeff, Forgive me if I’m writing you at the wrong place, Im not quite sure where to go other than where I see I can make a comment on the .net site to get to YOU! our MAIN MAN..Direct me otherwise if needed…
Finished my big study on Hig and now on to DRI regarding a past comment you sent me on it…
Question:
l.how did you determine the 34.80 initial profit target?It looks to be just below the top price of the trend from the 24th. I’m trying to figure out the “rule” for picking initial targets.
2. The Final Profit target the same question..Is it to be just shy of the gap from Dec. 07
Suzi | Apr 3, 2008 | Reply
Sorry Jeff, I mean on question 2 on the Final profit target, is it to be just ABOVE the filling price of the gap?
TheStockBandit | Apr 3, 2008 | Reply
Hey Suzi, nice to see you! In the future, please hit me up on the Bandit Hideout board or email when discussing trades from the Member Area, as this is a public site and not intended to discuss the member-based trades. If you ask me there, I’ll always reply!
Before I get to these, please know that there isn’t a hard-and-fast “rule” for picking stops or targets. The Strategy page found over at TheStockBandit.com has some guidelines, but it’s important to remember that every trade is different because each stock has its own “personality” if you will. Some stocks may make a huge run for a week to move 5%, while others can do that in an hour, so for the swing trades you have to consider the stock in question and eyeball the recent history of its price moves when trying to determine how far it might go on the next move. It isn’t an exact science, so there is a lot of art as well. That comes over time from studying, trading, and poring over charts continually.
But I just want to be clear that I don’t have a formula to go by when determining my stops or targets…I base them on some general principles (such as: risk less than you want to make), and I base them on the chart of the stock in question (how has it moved, where is recent support, where is next resistance).
For the Initial Profit Target in DRI, as I explained in the video above, the gap in December began at $35.31 (low of 12/18, the day prior to the gap), and the stock just rallied up to virtually touch that same level at $35.30 on 3/24. Knowing that must be an important level for two moves months apart being related to it, I wanted to book some gains prior to that level being reached again, as I expected some sellers to be lurking there. $34.80 was just the spot I picked, conservatively, because I wanted to take some off on the first jump. Setting a sell order at $35.30 might have gotten me close to a sale, but what if that level wasn’t quite touched again? So that’s why I set my price beneath there.
The final profit target was based on that being the general area that the stock tested from the upside and downside between 12/13 and 12/18, and is just another move of the same magnitude I was looking for in the initial pop, which happened to be $2.
Hope this helps! See you in The Hideout!
Jeff
Suzi | Apr 4, 2008 | Reply
Jeff, this was a great video, a great way to learn, to be able to watch, pause and replay several times to get it all… Thanks , Suzi
TheStockBandit | Apr 4, 2008 | Reply
Thanks Suzi, glad you enjoyed it and got something out of it!
Jeff
invest4ff | Apr 6, 2008 | Reply
Hi Jeff,
Great Video!
I am a junior NYSE day trader and I think I need to learn more from you. For your information, I just started a carnival on Equity Trading. For more information, please visit: http://invest4ff.blogspot.com/2008/04/carnival-of-equity-trading.html
If you are interested, please join blogcarnival and submit your entry to:
http://blogcarnival.com/bc/cprof_3971.html
Thanks.
TheStockBandit | Apr 6, 2008 | Reply
Hey invest4ff, thanks for visiting and for the carnival invite! Keep up the good work and have a great weekend,
Jeff