Stop losses and Entries

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joemelek
Jan 12, 2022 07:22 AM 0 Answers
Member Since Jan 2022
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Hi!

I had a question about stop losses. You mention that you use a 5% stop loss. Do you use a trailing stop, 5% or from your entry (pivot)? I assume you scale it up to the next pivot if you do the latter?

I use a 5% stop loss upon entry. I will use SCHW as an example. Say, we bought the breakout at 90.00 on January 4. My stop loss upon entry will be $85.50 (5%).  But, the low of that day is $86.81, and I will raise the stop loss to $86.81 as it advances as I do not want to own a stock that wants to make a lower low, and/or fill the gap.The stock advanced from the $90 entry and we need to give it some room to wiggle, and the stop loss remains at $86.81. On Monday it traded down to its 10ema at $88.97 which is not close to the January 4 low of $86.81. But, that $88.97 is the new stop loss. I hope that makes sense. Some folks raise their stop loss to 1% or 2% and get stopped out. I like to allow the stock to move a little and not get stopped out so quickly.

 

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Also, how much do you risk? For example, I\\\'ve recently been using the 200 DMA as an entry for stocks (assuming it closes above) and risking 1% of my portfolio. I did this by taking a 10% position and having a 10% stop below the 200 DMA. I wouldn't use stop losses and would just close it out if it closed below that 10% mark. My intent was more of a long term swing trade. I would hope to have the position open in a stock on a long uptrend. I\\\'d exit if the stock ran up too fast and closed below the 50 DMA, hopefully well above the 200 DMA at that point.

You are on the right path! My tolerance for risk is dependent upon market conditions. A 1% risk is appropriate for this market, and the 200dma is the new 50dma for most growth stocks. If you are watching your stocks closely then you do not need to use a stop loss. But, know that when you trade like that emotions can get in the way of your trading.

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I see you have different rankings (heating up, leaderboard, IPO, etc). Can you describe the leaderboard? Are those stocks you are in? Are there new entries for those for those who missed the entry?

I assess the markets by how leaders perform. I have a "conviction  list" posted every Saturday of anywhere between 30-50 stocks (depending on market conditions). The list includes growth stocks divided by technology and non-technology stocks.  I will post those leaders who have performed (or not) at the end of each session.

Those are the stocks I want to own. But, they must provide proper entry point as I try not to chase performance. In a strong uptrend I may cheat though😂 This current pullback is going to provide us opportunities t own quality stocks a s they reverse, pullback, and/or setup in bases.

I provide entry points of stock that are setting up at the conclusion of every session, and every morning before the markets open. Those stocks rarely overlap from evening to morning.

 

 

Thanks for you help, I am enjoying the site so far (Day 1)

Welcome to our community! Many folks DM me during the session on Twitter!

I hope this answers your questions. If not, then please ask again.

Regards,

Marty

 

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