So how does an investor or trader does not know when to sell? Well, my opinion is someone who focuses mainly on price and volume, rather than basic business fundamentals. In fact, I had some shares, which fell slightly. I wanted to keep them as long term investments, but it was very painful to see them give up their current levels.
This market has clearly demonstrated that the strategy of buy and hold can devastate your portfolio, if you do not use forms of protection, such as options, futures on stock indexes and strategies for short-circuiting.
In general, most traders who earn their living through management by trading futures and options on futures can be considered as followers of the trend.
Trend following benefits to traders about the trends occurring in the financial markets for a long time. In 2008, there were many major trends in the markets, and probably the best trend is that these specialists were easy money have been on a downward trend in oil prices.
After a peak of $ 150, the market traded below $ 35 recently. Most trend following CTA would have received the new short positions of $ 120 to $ 100. Down from $ 100 to $ 40 is $ 60.000 for each contract held by these professionals. In the field they now claim that it is better than the return of 400%.
Trend following traders are not trying to pick tops or funds. They are waiting for the market to say when this trend started, and they will go away when the market shows that the trend may be more. There is no magic formula to determine when these developments will occur or when a high price will be set, or when the bottom will be found. In periods when markets are unstable, these traders do not make money, and tend to experience some of the major upheavals of their heritage. However, strict application of risk management in their portfolios, some of the most efficient traders will reduce the volatility of their portfolios.
As it relates to the action? Well, most people want to be able to get this hot stock when it moves to 500% or more. Unfortunately, many of whom have acquired the experience, and then watch it evaporate as they expect more benefits than the stock. Professional trader, however, to separate their emotions from the shares, and left when there are signs that the trend is over.
However, there is a price level, in particular, and an indication that trade depends on your starting position immediately. Instead, he goes in different price points in the trend. Here are some ideas to help you determine when it was time to start making profits in their stock and when to quit completely.
Come on, let's say you bought shares of JRCC, as it was breaking my head from a small base in April 2008. This leak occurred about $ 20 level. Stoke then attended by over 300% in less than three months before the High End Over $ 60. An astute businessman would have ended all his stand at this level because you can not pick up the top. However, a smart marketer would have started to unload some shares around $ 55 level, and will be fully out position between $ 45 and $ 50. This is a very significant gain in three months! Since then, JRCC was trading at $ 5.05 in November.
So there were signs that this stock hit its peak? The first sign came in June 19. Shares were closed in four consecutive trading days, with a gain of more than 30% during this time. Stock going to the moon, and eventually, when the stock goes to the moon, he must return to Earth. June 19, stock opened at U.S. $ 2 at the opening, closing nearly $ 3 session. It was a wide range of motion of the talks so far, and that day was the largest amount for it too. It was the first signal distribution and smart marketer would have started a lot at the end or during the negotiations on the next day.
Two days later, JRCC has been closed to new high above $ 62. On this day, its trading range significantly decreased, as well as its volume, compared with the last trading day. The next day, June 24, stock closed almost $ 6, and 9%, the biggest day of below trend. Volume was higher than the previous day, indicating a more uniform distribution.
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