12 Minute Read

Tackle Today: Take Profit or Adjust Stop Loss

June 11, 2020

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Plan your trade and trade your plan

Traders,

Stocks are down in early trading on Thursday.  The early selling is being attributed to renewed fears of a second wave of coronavirus as economies re-open, reaction from the FOMC meeting yesterday where the Fed painted a dire economic outlook where they’ll need to keep rates in the current 0.00% – 0.25% range all the way through 2022 and good old fashioned profit taking after some historic moves to the upside over the past few weeks and months. 

If you’ve been new to trading in the last few months during the historic uptrend that saw the biggest 50 day surge in stock prices on the S&P 500 in it’s history you haven’t seen to many big red candlesticks during that stretch.  But, in most market conditions it is normal and healthy to have green and red candles, stocks moving up and down over time in trends and price action that is not simply one sided.

If you are trading, part of your trading plan needs to include a Target and a Stop Loss.  Recent upward price action should have allowed you to reach a few of your profit targets.  And today’s action should trigger some stop losses.  These are the potential outcomes of any trade. 

As your trades develop, it is wise to adjust stops over time to lock in profit, control your risk and adjust your exit plan.  If you have done that over the last several days and weeks, great job!  You are trading with discipline.  If you still need to learn the mechanics of how to do it, or develop the discipline to force you to adjust your stops through your rules then it’s important to identify these areas you need to work on and build your rules out as soon as possible.

Stop loss placement, then adjustment, is something that needs to first be understood theoretically.  Once you are making some of the profit you were targeting, you need to move your stop loss to lock that in.  But, more importantly, stop loss placement and adjustments need to best be understood through your rules.  You should have specific rules that determine when, why, how, and where you will adjust your stop losses.

If you have not built those rules out yet, a great place to start would be the STEP System Course or asking questions during the daily trader’s lounges.  Another resource you can use is the video of the day (see below) of the replay from last nights webinar from Coach Gino where he covers some of the basics on this topic. 

You will trade with more confidence if you build rules that you understand and can execute.  Remember, no trader is profitable all the time, and stop losses and exiting is a part of your overall trading plan.  When you get stopped out on a trade, simply journal it, learn from it and move on to the next trade.

#TeamTackle


Chart of the Day

AAPL Daily Candlestick Chart

In last nights webinar, Coach Gino used AAPL as an example on how to place Stop Losses.  With the stock in a recent uptrend, it had reached the upper part of its channel.  Technical analysis is crucial when placing stop losses, and candlesticks, channels, trend lines and intraday charts all play a role.


Video of the day

The Art of Stop Losses – Webinar Replay

Watch the replay of this special webinar from Tackle Trading on the Art of Stop losses with coach Gino Poore.


Traders Lounge 11 AM EST

Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.

Cashflow Club 8:30 PM EST

Held every Thursday before Friday’s option contract expirations, this show helps you perfect your favorite cashflow strategies.

Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.


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