Monday, November 28, 2005

Blog of the Week:Swing Trading with the Stock Bandit

When to Raise Stops

Trading rules are a must if you want to trade for a living. Only by following a systematic approach will you be able to find trading success. Most of the time, stocks require some room to move, and tight stop loss orders don’t offer a lot of upside potential for swing trading. However, on rare occasions, you can book greater profits by knowing when to raise stops and pay yourself with big gains.

Recently, the market has been tremendously strong. We’ve had a number of big winning stock picks, and it’s important to know when to tighten stops. Because the market has moved almost straight up (nearly a parabolic uptrend), it's time to get more conservative and raise stop loss orders on open positions. Markets don’t move in straight lines for very long, so it’s important to recognize when an uptrend is getting a bit tired and due for a rest. It’s at times like this when a stock trading strategy can use some conservative adjustments to capture profits.

Last week, instead of following my swing trading strategy which gives...



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