Since they relate to how I manage my own portfolio using the stock selection section, these articles will be moved to the stock selection section.
As I posted on the Model forum during the day yesterday, I purchased positions in EGN and SWY.
The portfolio appears in the table below. In yellow are the changes I've made. Usually, I raise my stops in a regular fashion, especially in this type of market, where any headline could push everything down. Indeed, Entry management, Stops management and Trade exits are the three key features that are entirely at your discretion. Below, I share how I handle them.
1. Entry
To open a new position, I first need to have enough cash. The more cash I have available, the quicker I am to enter a new trade, and hence likelier to execute a sloppier entry by buying high within the buy zone.
Yesterday, before the market opened, I was already holding enough positions, so it was easy to wait until interesting stocks fell further down into the buy zone. This will be even more the case today, and I might not even enter any new trades. In general, "buying cheap" works better than "buying expensive." Most stocks that break out revert to their 5MA, where the buy zone lies.
When I enter a trade, I watch what the 20DMF RT is doing and how the EV RT is acting for the specific stock. The idea is to buy pull-backs that are not sold.
2. Stops
Although the weekly system was back-tested using a 5% stop loss, I usually place stops manually, and at a price lower than the low of the past few days (but not more than five days.) If the stock moves in the trade direction, it should move fast. This means that a failure would quickly cancel the trade for a fairly small loss (usually 2% to 3%.) I always prefer to get out fast and come back later, even if it is at a higher price.
A new entry starts like a day trade or a one- or two-day trade. It is only if the trade acts well that I would keep it longer and eventually build a strong winning position. The objective is to trade less and keep positions as long as they act well. I use the daily stock selection to find good candidates, while the weekly selection is used only for monitoring purposes.
3. Exits
Exits are more difficult to manage. I exit when the trade shows a small loss after a few days of going nowhere and if the EV pattern shows that I might be wrong. I might also exit when I reach the 20% profit target, simply because I believe that there might be other opportunities somewhere else, especially since the stocks selection is tuned to pick up the winners for the next five days.
Among the daily list shown today, I circled the stocks whose price is within the Buy zone.
First, please note that I kept ISRG as a short trade that is clearly "doing nothing." It is a good hedge (together with a SDS long position,) but I might close ISRG if the daily stock selection does not select that stock anymore.
For today, I picked four possible buys. I did not select BIDU, because I already have two internet stocks in the portfolio. Only two of the stocks are within the buy zone and since I already have quite a few positions, I would only enter at the bottom of the buy zone.
Below are a few Figures for today's possible trades.