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Monday, May 09, 2005
Market Recap
This market continues to hang tough and refuses to fall back. You have got to wonder if it is just trying to suck some new money in before it eventually falls back to test the recent lows. The indices are still trying to fight through resistance with the S&P looking the best right now. The market closed higher again today for the sixth time in the last 7 trading days however, today's volume was very light and this is a concern for the bulls, especially on a Monday. The DOW closed higher by 38 points, the NASDAQ was up 12 points and the S&P gained 7 points.
The Time Stop
In the past, I have discussed the different types of stop loss orders that we can place on our trades such as a certain percentage (2%, 5%, and so on). There are also the stop loss orders at technical support points on the chart such as price support, moving averages, and trend lines. We also have the dollar stop loss, which is placing a certain dollar figure on your loss, such as $500 per trade. I highly discourage the dollar type of stop but they are used by some. One stop loss that I have not talked about is the “time stop loss”. I will cover this tonight.
Stops do not always have to be set based on the above criteria; they can also be set based on time. Time stops are stops which you are giving the market a certain amount of time to work your trade. If the trade stays flat after your entry for the time you choose, you get out of the trade. I use these time stops on day trades when the market is very active.
For a scalper, it could be as quick as 5 or 10 minutes. For a day trader, it could be 45 minutes to an hour and of course for me, I have end of day stops to make sure all of the day trade positions are closed. For the STHQ portfolio, we could implement a 5 day stop for the trades that are not working. These time stops are used as a way to get out of positions that are not moving. If you have limited cash and do not want to be tied it up in a trade that is not working, that cash could be better used in a different trade. Dead money does not help me make money. If the stock is not moving, I can use the money, time and energy in some other trade that may be moving faster.
Let's face it, if a trade is good, it should be moving in the direction of the trade quickly. When it does, you know you have made a good trade at the proper entry point. After a certain amount of time passes and the trade is going nowhere, I should know to get out of the trade. At that point, I am better off looking for new, better movers rather than babysitting a trade that is not working.
Obviously, these time stops can not be placed like a price stop loss can. Brokers do not accept a stop loss that says “stop me out after 30 minutes”. These are just mental stops to help you make better use of your cash when you realize the trade is not working as it should.
STHQ Chart Index
If you go to the chart index in the left side menu, you can review and study charts that we have annotated for each stock listed in the past.
For New Members
For all of the new members with us, please make sure to read the link “How to use Bulletin” at the bottom of the Bulletin page on the website. It is critical that you know how to use this trading tool before trying to trade the stocks mentioned. The effectiveness of your trades will diminish if you do not completely understand how the information is presented.
Please Tell A Friend
Please tell a friend about our service. As always, thank you for your support past, present and future!
Earnings Calendar
We have added the earnings link for each stock on the bulletin. To access the link for earnings you can either use this link below or click the link on the bulletin for the corresponding ticker. Click the online bulletin in the left side menu for access to the earning calendar for each stock listed. It is not recommended to hold a position through earnings. You can always buy the stock back after the dust settles.
http://www.earnings.com
Stockcharts Listing
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