When I post charts one of the questions that I get asked a lot is; what is your target? My answer is always the same; the target is up. When it comes to swing trading (holding period 1-20 days), I like to sell on the way up. I’m a believer that stocks move in momentum bursts that may last 3-10 days. What I’m looking to do is to take as much money out of that burst as possible without giving too much back.
When it comes to short-term swing trading there many ways to sell;
Sell on the way up; +10%, +15%, +20%, etc. Now and then you will have a stock that goes up 50% that will make you wish that you would’ve held on. Other times when you hold on for more the stock tanks and you will kick yourself for not selling it all at +15%, that’s trading, finding your common ground.
You can sell in pieces; sell some on the way up, sell some when it breaks the previous day low, sell some when it violates the 10-day moving average, sell some when it breaks the 20-day. You might run into a problem when you have a stock that is up 30% from your entry, and the 10-day is 20% away. Can you stomach 20% of your profits being wiped out on a natural pullback? Is trying to eek out another 10% worth the 20% pullback? Does a fresh breakout have a better r/r and your money is better off there?
I think you have to find what works for you and fits your personality.
Frank Zorrilla, Registered Advisor In New York. If you need a second opinion, suggestions, and or feedback in regards to the market feel free to reach me at email@example.com or 646-480-7463.