Dave Landry is principal of Sentive Trading, a money management firm, and a
principal of Harvest Capital Management. Mr. Landry is the author of two top
selling books,
Dave Landry's 10 Best Swing Trader Patterns And Strategies and
Dave Landry On Swing Trading.
If you would like a free trial to Dave's Nightly Swing Trading Alerts Report
click here or call 888-484-8220 ext. 1.
More Keys to trading success: Money Management,
Risk Control, Letting Positions Work, and Smoke 'em If You Got 'em!
Talx Corp. (TALX | Quote | Chart | News | PowerRating), mentioned last week (email me if you need a link),
provides more examples of recently discussed lessons. Notice the stock triggers
an entry (1)--waiting for entries helps ensure that the stock is headed in the
right direction (at least for the time being!) A protective stop (2) is used
just in case you are wrong. Notice that it is placed outside of the
"normal" volatility to help being stopped out on noise alone. The
stock didn't do much for a few days (3). However, as I preach, if you micro
manage and exit early, you'll never catch stocks that (eventually) turn into big
winners. Notice the stock gaps open and quickly hits the profit target
(4). In a case like this, when a stock is moving extremely fast, it's okay to
let the stock run in order to possibly squeeze out some additional profits (5).
At this juncture, the trailing stop is now tightened to breakeven(6)--the same
level as the entry. So far, so good. If the stock trades below this level,
you'll get taken out at a scratch (barring overnight gaps). If it turns back up,
you have the chance to participate in a possible homerun.
For more information on the concepts discussed above, email me for a swing
trading primer.
On Friday, the Nasdaq ended lower but off of its worst levels.
Ditto for the Ps.
So what do we do? The
big blue arrows continue to point up. Most sectors remain constructive. And, the
ones that are in bona fide downtrend are the ones you want to go down
anyway--commodity related stocks. Continue to look to buy the market but wait
for entries just in case this correction hasn't ran its course.
As far as setups, Family Dollar Stores (FDO | Quote | Chart | News | PowerRating),
where people go to buy crap, looks poised to resume its uptrend out of a
pullback/TKO.
Best of luck with your trading on Monday!
Dave Landry
dave@davelandry.com
P.S. Reminder: Protective stops on every trade!
P.P.S. If you would like a free
trial to my trading service, click
here.
