Menu Close

Manage the trade – sell stops

QuestionsCategory: QuestionsManage the trade – sell stops
Cristian Villanueva asked 5 years ago
Hello Pat, I'm Cristian from Santiago de Chile, so I hope "Google translator" helps me and reflects what I'm asking you. I have followed you on twitter since I started trading (february 2019) and I really appreciate your commitmment with teach and share your knowledge. Before start, I read "how to make money in stocks" and both books from Mark Minervini. I read it constantly, more than once and in each read I learn something new. I use Marketsmith too. Its a great tool and save a lot of time. As surely other VIP Members, I have a full time job, so every buy stop include a sell stop, and as O'neil follower, I take breakouts from long bases with a SL at 8%. In this scenario I "rest" a lot on the "Pattern Recognition" feature, and I have had a lot of fails trades that reach the SL. In fact, I wrote to Marketsmith support to know if they have a kind of "success ratio" of this feature, because, how we know if this feature give great result?, If we cannot measure it, we cannot control it and if we cannot control it we cannot improve it (as Edwards Deming suggest); but well, they said me that it does not have a "success ratio".... anyway. I save all my trades with screenshot in order to look them, study and try to improve the way that I handle them, specially the exits. And this is the main challenge that I'm facing, manage the trade and specially the exits. For the entries on long base breakout, I "pyramid" the entries (50-30-20) between a 5% range from pivot point until a full position with a risk of 1,5% of my total account. But, for the exits, I trying and working on define rules to sell the position. I start with the 7%-8% and then I use usually the 10 EMA, 21 EMA and 50 EMA (daily chart); and I use these as exits with or without volume above the average volumen. At this moment my last exit is below the 50-day MA, at this point I'm out the full position, where ussually occurs a bounce (as I have a full time job, I have previously set up the sell stop slightly below the 50-day MA, so even a "shakeout" can close all the position). Until now, and even if it sound a normal strategy, I'm facing a lot of losses. As I said, I'm trying to set sell rules; looking EMAs, price action as sell below the 2nd lower low, sell below the first low pivot after the entry, etc. Maybe I'm undoing the full position too soon, and not "sell some" as you explain on your videos. What rules have you define over your many years of experience?. When you say "sell some", what percentage you sell?, do you define for example, 20% of the position below the 8 EMA, 30% of the 20/21EMA and 50% below the 50MA. Do you mantain part of your position even if the stock close below the 50-day MA? I have noted that you set up entries too on smallest bases, what percentage you use to buy on this kind of bases? Do you "pyramid" the position as if would be a long base? I apologies for this long history. I will be more precise the next time. Many thanks!
3 Answers
Avatar photoOwen Staff answered 5 years ago

Hi Cristian,
Video from Patrick. Part 1 of 2:
https://youtu.be/yLP3LllpwE8

Avatar photoOwen Staff answered 5 years ago

Hello Cristian,
Video 2 of 2 from Pat:
https://www.youtube.com/watch?v=fuI884IfT3c

Cristian Villanueva answered 5 years ago
Thank you Pat!. I appreciate a lot the time that you dedicated in answering my questions, as well the tips you give on the videos. Thanks!