Investor Spotlight

Sunday, April 22, 2018

Trailing Stops

The back of my business card says:

What to Buy (Leading Stocks in the Leading Sector)

How to buy (Market open on a "Follow Thru day")

When to Sell (Trailing Stop/Stop loss at a defined loss target)

In my post last week, I mentioned 10 stocks (What to buy) from My Stock Watch List that one should have exercised a small position at the market open on Wednesday April 11th "Follow Thru" day (How to Buy). These were the leading stocks out of the 25 stocks that were on My Watch List. Market was in a confirmed uptrend and that was a sign that the conditions were favourable in the market to initiate a small position on the leading stocks to test the validity of the "Follow Thru" day.

The last time we had a "Follow Thru" day on Feb 14th, the market took a down turn within 8 sessions and the 3 major indexex - $SPY, $QQQ and $DJI - slid down below the 50 day sma(simple moving average). This time around once again, the 3 indexex began to slide down to the 50 sma within 7 sessions after a "Follow Thru" day. Not all "Follow Thru" days will materialize with the indexes reaching new highs. It is critical to have a loss target identified (when to sell) and specified in the Trade Plan. If you don't stay disciplined with your stop losses, than you will end up with a small loss of -4% end up as -7.15% instead. $SGH was closed out using a trailing stop at -4% loss instead of letting it slide down to -7.15% at the end of the Friday session last week.

Results of 10 stocks compared to the Indexes

Here are the results of the performance of the 10 stocks that were initiated with a small position 8 sessions ago. You always want to compare the performance of your stocks against the leading index if you are aiming to out perform the market. I have also highlighted the performance of the 3 indexes for the same period.

Indexes:

$DJI ... +0.23%
$SPY ... +0.55%
$QQQ ... +0.68% (Leading Index)

10 Stocks:

$SGH ... -4% (3 days in trade)
$BZUN ... -4% (2 days in trade)
$SEDG ... +0.55%
$ADBE ... +1.04%
$ABMD ... +1.84%
$CASA ... +1.96%
$RHT ... +2.10%
$CPRT ... +2.14%
$BR ... +2.20%
$CLR ... +4.64%

Overall performance of all the 10 stocks combined was +0.85% over the last 8 sessions. That's +25% better than the leading index $QQQ performance and +55% better than the $SPY (general market performance barometer).

Mentoring Program

Did you know what stocks you should have purchased on a "Follow Thru" day on Wednesday April 11th?

Do you know how to scan for Growth Stocks that will lead the market when institutional selling ceases and you have a "Follow Thru" day?

Do you know how to mitigate losses in your stock positions?

Make a commitment to learn:

How to TIME the Market?
How to find the Winning Growth Stocks?
How to Buy the Stocks Right?
How to Plan your Trade for Profit, Loss and Time in the trade?
How to Sell your Stock Right?

Classes for April are full and we have just a few slots left for our classes in May. Hurry and secure your spot before they all fill up this week. Schedule a FREE 30 minutes of "Discovery Call" with us and see how best we can help you become a consistent and a profitable trader and an investor in 2018. Don't procrastinate and pass up the opportunity of making a difference to your portfolio. Start out now with a resolution to invest in your education.