Advice on Trading Positions & Trend Following Education
I receive many emails daily. Some are on trading education and trend following and others are on specific trading positions.
Please see my response…
Thank you for your email, however I do not give advice about particular stock positions. Only licensed financial advisors can do this. I am licensed with the NFA as a commodity trading advisor, however I do not give any advice whatsoever and my goal is to educate solely. We are here to discuss situations from an educational perspective only. Therefore, I will only respond in the hypothetical.
Generally, this bull market is very old and is about to have its fifth year anniversary in a matter of days. Only two bull markets have ever lasted longer. In such an environment those without substantial abilities and total conviction to their rules can quickly suffer significant losses.
You mention you are “scared”. Emotions take over and control most people’s trading until they have carefully studied a specific set of trading rules. Once they have determined how they react in various trading circumstances and how to control those reactions, they can trade within their rules without emotion.
As I mentioned, before entering any trade, you must have a sell stop price in mind and stick to it. This is all part of having a complete thought out trading plan. If it appears there will be a loss of this magnitude, its best to immediately, robotic-ally enter a sell order. It is cheap insurance against losing more. This happens and its best to move on preserving capital for future opportunities. I have had stocks gap down much more for one reason or another and it wasn’t devastating because I sold immediately.
I hope this gives you some guidance and direction.