Should we have targets in swing trading?

Discussion in 'Trading' started by neutrino, Jan 23, 2004.

  1. Let's say you expect a stock, that trades at 50, to reach 55 within a week. You buy the stock and put a stop at 48. The stock touches 55 after 3 days. Do you sell?
  2. If you have a target based on a technical reason (previous high/resistance, Fib extension, MA resistance, etc.) - yes. You can always re-enter if it sets-up again.

    If you arbitrarily picked a target (which I would never do!), I would use a trailing stop.
  3. lindq


    Pigs get fed, hogs get slaughtered.
  4. gms


    How do you reconcile the above answers (not saying they're wrong) with the adage "let your winners run"?
  5. These are questions I struggle with all the time. I've tried to test different scenarios on tradestation: take profits, take 1/2 profits, trail stops and still have nothing conclusive. Many times the results are very similar. Anyhow, would be interested on others thoughts here. Obviously, a large portion of this can be psychological for some people. Great discussion.
  6. lindq


    That's a good question, but it goes to the issue of what "run" is. In my mind, a 10% gain in a few days qualifies as "run", especially if one is trading a system that maximizes profit at that level. If you are trading a system that specifies an exit, and you elect to extend beyond that exit, then you are, by definition, into an area of increased risk. So basically what I am saying here is that for a system trader to let his profits "run" is not in general a wise thing to do. God knows I've left a tremendous amount of money on the table by taking profits at a predetermined level. But that's the price of a system. Hit singles and doubles, and let the homeruns go.
  7. prox


    Only if it's derived off something known to show accuracy, like Fib projections.
  8. lindq


    Fib projections are known to show ACCURACY for selling signals?? On what planet?
  9. On my planet, for one.

    Almost all my sell signals are based on Fib projections (extensions), or a combination of Fib projections and other resistance.

    My accuracy rate is pretty damn impressive, if I don't say so myself!!!

  10. lindq


    Must be a pretty lonely planet! What do you do for fun?
    #10     Jan 23, 2004