Thursday, January 19, 2006

Stops - Today and in general

The market continues its upward drive with force today. TICK has slowed which has me updating all my stops. The market whipsaw has made and broken quite a few people over the last two days. I had a large portfolio drawdown (in my trading and non-trading portfolios) yesterday which has been more than made up for today.

Generally if I have an intraday trade, I will update my stops based on time intervals. I choose the time intervals based on the performance of the overall market (that is to say I use differing time stops on an overall down day than I would on a steady uptrending day). Another factor considered is the performance of SPY, current TICK and intraday volume trends (if any) in my holdings.

I also work with a time stop established at the beginning of a trade. My time stop really depends on when I enter the trade, what type of trade it is, and what my objectives are. For a swing trade my time stop may be 5 days from now. For an intraday it may be 3:15 EST.

The only question in my mind for today's action is whether the pullback will happen towards the close or in a mini retracement tomorrow. Key to tomorrows action will be earnings, although tomorrow's slate is pretty lean if I remember correctly.


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