Thursday, March 5, 2009

Exiting strategies

The USB trade went well and i was stopped out yesterday at 10.43. The only gripe i had was that my exit was nothing but sloppy. Here's what happened:

Pre-market open, the SPX futures were screwed, plus USB was also gearing to gap down significantly which would bring it close to my initial exit target of 10.00. Seeing this, i wanted to capture a more significant profit, so the only 'safe' way i figured was to do a trail stop like i did with my JPM trade.

However.

Sure enough it gapped down, and within 5 minutes i was taken out of the trade. I set my 30c trade stop fairly tight as i didn't want to yield too much profit. As i write this USB closed at 9, and it went as low as 8.53.

As i write this, there really isn't that big enough a way i can think of to improve it. I had reasons for having such a tight stop:

1) I really didn't want to give up too much profits, so i had to find a balance between how much room to let it run, and a comfortable amount i was willing to 'give away' should the market go against me. (and we all know that can happen on a dime)

2) The trail stop analysis was more shoddy as i just looked at the past week for how much of an advance/decline streak that could happen. 30cents seemed to be a fair mark to me then.

Anyways, no use crying over spilt milk, just focus on improving my exits. Cheers to another profitable trade!

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