One way to limit trading losses is to enter a position at the top of the short range (bottom of the buy range for long trades.) We can see below than four candidates reached that level. This resulted into entering two trades.
You can see below that I raised the stops on both trades. Indeed, when I enter a new trade, I usually consider it as a day trade, with stops that are close to a break of a previous low or High. However, for the following day, I usually adapt the stop to a more acceptable level so that I would not be kicked out due to normal volatility. Note that these stops are often not fixed: I keep hard stops only when I am not in front of the screen - which is still often.
Below are the ZION and JCI Figures.
For today, I only have one short candidate: SODA. SODA is a rather popular and strong stock, but it has shown some signs of weakness.
The past few days have been difficult, because of obvious market choppiness. There are two ways to handle such a situation: stay in cash or enter at extreme of the ranges with tight stops.
Usually, about two thirds of my trades are "aborted". Either on an initial stop (In orange,) on a stop that has been raised (In Blue) or when something is not going right (in yellow).
It is interesting to see that:
1. The major gains come from a few trades
2. Winning or losing trades come "in packs"
These two characteristics are common to every trader. With good entries and good money management, we can easily go through bad times.
Please note that I only kept on this table the trades that were issued from the Stocks Selection process. I also have traded GDX, SDS, TBT, often as an hedge. These are not included.
Also note that the table bellow will not be updated. I just posted it to show how the stocks entry and the money management issues reflect on the overall returns.
Since I will be taking one week off starting on Monday, there is a high probability that I will not enter any new trade today. For next week, these Portfolio Management posts will be interrupted (I will not be trading.) I will however still run the stock selection system every day and update the web site. Daily comments will be on the light side.
