Wednesday, August 03, 2005

Discussion on exits




"what strategy do you use to determine when to exit a stock like VLFG?" -- JWU

I thought this question was worth a whole blog post. A couple other people have written about exits lately, Trader Eyal on exits, Taylor Tree on scaling out of positions. If I missed anybody, feel free to post the link in the comments.

I sold my VLFG today near $6.40. I said last night it felt extended, but that is only part of the problem. I study the nasdaq composite chart every day, and when I feel like most of the upside is gone I get real antsy and I can't add to positions or take on new longs except in rare cases. I'll also sell when lower-channel line support is broken on the downside regardless of what the averages are doing.

I always watch the 10 and 20 day moving averages on every position I carry, I'll trail stops under whichever one looks like the best fit. Slower trenders like UPCS and SIRI work great with trailing stop a stop just under the 20-day SMA for example. For some of the stronger trenders like VLFG and XWG, trailing under the 10-day SMA works much better.

But some of my best sells come from advice my friend Jarod gave me about selling, and we've sort of got a running joke about it. Whenever any one of us starts talking like Boris in the James Bond movie "Goldeneye", that usually means its time to start selling. I'M INVINCIBLE!!! Yeah right.

In choppy markets like we're in currently, the "Boris sell" is the way to go. Its ok to let some other Boris carry the risk, especially if it looks probable that you'll be able to buy it back cheaper at some future time.

6 Comments:

At 8:32 PM, Blogger Frank Chiu said...

What do you think of KYPH? Do you think it can pop up amidst the ugly market conditions?

 
At 9:12 PM, Anonymous Anonymous said...

man that pic is great! That picture really does say it all doesn't it? I'm invincible! I think I'll start firing up a big fat stogie evey time I close a trade with a profit!

te he he!

Kevin Pickell

 
At 10:31 AM, Blogger Gordengekko said...

Jon-

DSTI is sitting right at the 50 dma and is getting depressed so check it out on my blog.

 
At 10:19 PM, Blogger Gordengekko said...

Jon-

Have a look at PACT your speed. ICGE is another one that looks good.

Gekko

 
At 6:15 PM, Anonymous Anonymous said...

It is sure amazing how you can be within a few cents of the top of the stock. Just a bit curious how you came up with that $6.40 target. Uncanny.

 
At 6:39 PM, Blogger Gordengekko said...

If the market stayed green I highly doubt VLFG would of topped out but 3 out of 4 stocks follow the overall market. Look at Jon's XWG pick. The stock continued upward with the overall market for the most part.

Gekko

 

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