Another question about Trailing stops?

Question

When it comes down to it, it is a matter of greed, isn't it? If your stock is up 25% and you choose not to use a trading stop, you could lose it all. If you do use one and one day the market takes a jolt due to bad news so the stock goes down... it triggers your sell. Later the stock goes up another 25%... should you be angry, or happy that you got out with a cool 25%?

Answer 1

If you're using trailing stops, and you'd be foolish not to, you are protecting your profit, and if the stop get triggered, at the worse you have profit in your pocket and you can never get hurt taking profits.

When you set the trailing stop you could consider using a point that is a few cents ($.10) lower than the current support level, that way if it hits the support, it could turn around, if not, you're still out with a profit.

Even when you get stopped out, if you follow the stock, it may be preparing for another run, and you could always buy it again.

Just keep using stops and remember no one's ever gotten hurt taking a profit

Answer 2

The way you are talking sounds like you are in medium/long term share trading. I'm not sure if stops are that important in such strategy. The best way is to look at fundamentals. When the share price of a particular stock reaches a specific goal, normally based upon the p/e, then you sell. We are currently in a bear market and as a result (if you haven't already...) the best thing to do is get out of the market. The credit crunch was an ample warning.

An important rule of any form of trading is that you should not suffer from regret, you cannot predict the future. Consequently you invest in a wide range of shares because some will inevitably go down, but many will go up if your strategy is well thought out. If you bought the right shares, a company may go down for a short time, but the fundamentals will eventually direct it northwards... its only my view...

Answer 3

It is somewhat  a matter of greed. It's more a matter of understanding reality and risk. It's a matter of being professional.

Read;

Trading In The Zone,  Mark Douglas