Just posting my trades - winners and losers, purely for my own convenience. This is not trading advice, do your own homework.
Friday, May 10, 2013
Stop loss wisdom from Thomas Bulowski
Thomas Bulowski from the thepatternsite.com posted this on his Facebook - good stuff.
Stops can work wonders for quick trades that go wrong. I don't use them for buy and hold and position trades. But I DO use them for swing trades and mental stops for day trades. With this trade, I don't want to sell if the general market is taking my stock down and the industry and stock fundamentals haven't changed. In other words if all else is equal, a declining market trend will take a stock down with it. Why sell? You should sell if that market current turns into a bear market. Then hold onto long-term positions is dangerous to your wealth. Otherwise, it becomes a question of how low will the stock go and can you tolerate such a loss? Often you'll find that when you sell, about 2 weeks later, the stock bottoms and climbs. If the industry or stock internals (fundamentals) change, then holding can be a disaster. You have to evaluate each situation, do your research, and make the call. No easy answers.