Trading Plan

[TradeBot 10]

Hey guys,

 

I'm in the process of formulating my trading plan (as I watch gold and silver prices skyrocket - thank you Mr. Putin ), and I was interested what was in other people's trading plans when it came to when to take your profits and when to cut your losses?

 

I've read that you should let your profits run, and cut your losses quickly. I'm trying to do swing trading, so how soon should I know if a position is a loser or not? I've heard you should trade on catalysts. Anyways, Had a few questions on a few positions I have open:

 

When Should I Take My Profits?

I have is KBH (K & B Home Builders) It's risen about 10% in the last month with the housing report showing good data. I created a stop limit order with an activation price of $19.50 and a limit price of $19.40. For stop limit orders, should you leave a gap between the activation price and the limit price, or would you just do a stop market order? It looks like it may hit a resistance level at about $25/share. It just crossed the 50 Day SMA. At what point would you guys take profits? Would you take 10% now and be happy? Would you keep the stop limit order in place to guarantee a 5% return? Is there something else you would look for (a technical indicator or fundamental analysis item) that would make you take profits?

 

Another position I've got is gold, and it has gained about 6% over the past few weeks. So maybe it'd be time to take profits on gold when things between Russia and the Ukraine settle down?

 

 

When Would You Cut Your Losses?

 

I mentioned WHX (whiting trust), which is an oil/gas consumables company that is depleting it's supplies and supposed to terminate in March 2015. I bought it at 5.75, and it's at 5.25 now, after just having paid $.55 as a dividend. I'm starting to think of this as a loser. Why? If it pays it's standard quarterly dividend from now through March of next year, that makes roughly $2.20-2.30 in dividends, and it's dividends have declined since the trust's inception. So the stock price will be worth squat at the end of that time period...meaning, you'll lose about 55% of the stocks original value ($5.75 minus the $2.85 it paid in dividends).

 

Anyways, I'm thinking about switching sides, and shorting this stock. How do shorts handle dividends? Would I have had to pay $.55/share if I held a short position and the company issued that dividend? The only downside to this is if the trust finds some ridiculous oil reserves, and continues, but I don't really think that's possible. The claims are it's already used up 87% of it's life, and anything over 90% is a shaky bet. Looks like shorting is the way to go on this one, but what do you guys think?

[MilaRose 10]

There some steps to success trading plan- Skill Assessment, Mental Preparation, Set Risk Level, Set Goals, Do Your Homework, Trade Preparation, Set Exit Rules, Set Entry Rules,Keep Excellent Records,Perform a Post- Mortem. Sure you can become consistently successful and survive in the trading game.