f35c
01-13-2017, 07:11 AM
Mike,
A question about risk exposure after a follow through day (FTD), and a question on how to take risk off the table as the market comes down.
Putting risk on:
I've seen the Market School Exposure Model, but how do you use it practically to get in and out of stocks?
WON always stated to get into 1 or 2 stocks on a FTD. Then he would wait for these 1 or 2 stocks to make some progress before adding more risk. Market School (MEM) has an exposure count to guide you, do you adhere to it closely? And what would you recommend for people with out MEM?
Right now I'll add 1 stock/position on a FTD, up to a total of 3 stocks after that until I see progress: meaning each stock must show me 5% PnL before I add stocks 4, 5. This can cause me to miss some break outs / leave money on the table. If all 3 initial positions fail, I go to half sized positions for the next 3, or perhaps by this time the FTD has failed, at which time I'll start my waiting again. If just 1 position fails, then I will try a new position, keeping my total to 3 stocks until each hits 5%+. 5 stocks = 100% of my portfolio on.
Taking risk off:
When the market is coming off, WON talks about reducing risk when the market goes to "under pressure" e.g. taking off stocks with a small loss, or stocks with less than 4 or 5% profit. Then finally at "market in correction" killing all stocks with less than 4 or 5% profit. Currently I ignore this approach and simply go by my sell rules which typically get me out a max 4-5% loss should the market act as described.
A question about risk exposure after a follow through day (FTD), and a question on how to take risk off the table as the market comes down.
Putting risk on:
I've seen the Market School Exposure Model, but how do you use it practically to get in and out of stocks?
WON always stated to get into 1 or 2 stocks on a FTD. Then he would wait for these 1 or 2 stocks to make some progress before adding more risk. Market School (MEM) has an exposure count to guide you, do you adhere to it closely? And what would you recommend for people with out MEM?
Right now I'll add 1 stock/position on a FTD, up to a total of 3 stocks after that until I see progress: meaning each stock must show me 5% PnL before I add stocks 4, 5. This can cause me to miss some break outs / leave money on the table. If all 3 initial positions fail, I go to half sized positions for the next 3, or perhaps by this time the FTD has failed, at which time I'll start my waiting again. If just 1 position fails, then I will try a new position, keeping my total to 3 stocks until each hits 5%+. 5 stocks = 100% of my portfolio on.
Taking risk off:
When the market is coming off, WON talks about reducing risk when the market goes to "under pressure" e.g. taking off stocks with a small loss, or stocks with less than 4 or 5% profit. Then finally at "market in correction" killing all stocks with less than 4 or 5% profit. Currently I ignore this approach and simply go by my sell rules which typically get me out a max 4-5% loss should the market act as described.