How do you not get caught by downdrafts?

Discussion in 'Professional Trading' started by bstay, Apr 24, 2006.

  1. bstay



    I've been learning to daytrade/swingtrade for some years, and recently turned fulltime. But everytime I'm loaded with "good" swing positions, I got washed out by market downturns such as the one yesterday.

    Reminds me of year 2000 when I lost a bunch and stopped trading to concentrate on job. How do you protect your swing profits? Anyone else in my situation?

  2. I believe a trailing stop would work wonders in your situation.

    Giving away gains...... not smart.
  3. By definition, a swing trader buys the downdrafts and sells the upturns -- you should be out selling on strength with no patience for sitting through pullbacks.

    As for trailing stops, I find them specifically useful only during extreme price moves -- parabolic, blow-off volume situations. They are basically an admission that you are ready to exit the position; for me, I usually find I do better just exiting at market whenever I find myself thinking about trailing up my stops, but that's just me.
  4. Yeah, makes sense. I was actually leaning towards a mental trailing stop. Just know where you'd like to get out to protect gains.

    That is how I do it, but good advice, as that is how I do it, but sometimes get a stock that goes heavily in my favor and will mentally trail the stock, i see nothing wrong with that... as long as it is a liquid stock that is, if not, then.... I can't help you.

    EDIT: I'm not a swing-trader though, so... my suggestions shouldn't be taken as seriously as a swing-trader.
  5. bstay


    Thanks for the suggestions, I guess I should stay out today. Trailing stop is a good reminder that I should lower my profit target/expectation during this period.
  6. I think you should ask yourself a couple of key questions before you begin full time trading again.

    Are you willing to adapt to an ever changing market?
    Obviously it was not a "GOOD" swing position because you lost money. How are you objectively judging your trades?
    You say you have been swing/day trading for years and just started trading full time. Do you have a trading plan?

    If you are trading full time have you thought about trading more actively during the day?

    For my trading style I need to have over 50% winners to be profitable. To accomplish this on a daily basis I make between 20-50 trades a day. The more attempts the market allows me to have the better chance I have of batting for average.
  7. ==============


    Prefer to Day trade and
    swingtrade separate acounts. Dont merge the 2 ;
    or at least till you get it.

    SPY, ES, DIA,YM had a fairly typical sell /correction in buy/ uptrend;
    sounds like you were daytrading, without written plan.
    50 period moving average helps with plan.

    On mountain charts, daytrading
    AND swingtrading;
    like to buy after the valley, sell after some peaks,
    premature selling , dont usually care much for it.

    Sounds like mainly you need a well researched plan;
    the plans of the diligent.-Solomon, trader king