When I am not confident that the bottom for a position is in, I use tight stops. When the confidence level goes up, I loosen them way up in order to stop the unexpected loss while letting my profits run. If UVXY falls below ~$22.40 then it will be back into the region of what I labeled as wave 1 up. That would mean my assumptions are all wrong.
Until then I can just let things play out. If I subsequently count 5 waves up of significant size then I will market sell and wait for the the big wave 2 vee pullback. I might even move the cash into JNUG at that point if JNUG hasn't already taken off by then.
Captain,
ReplyDeleteI guess we wish we hadn't set our stops to $22.38, therefore missing out on this afternoons run to $27.18 and now $28.46 in extended hours trading. Ouch!
Oh I'm sorry you don't know how stops work! A stop does not mean "sell and go away forever". It means "Sell now because prior assumptions were wrong but then watch the wave pattern to reassess the next entry point".
ReplyDeleteAdditionally, when I see that the waves are expanding, I move the stops up accordingly based on the wave count. I have posted a few of those moves in real time just to show people how to do it but I certainly do not post all my stop changes in real time! But here is the log right out of TDAmeritrade showing I canx the 22.38 and changed it to 24.38. I removed the QTY because that is my business.
Filled Sell xxxx UVXY Market 24.3844 -- -- 15:58:48 12/10/14
Canceled Sell xxxx UVXY Stop Market -- 22.38 12/10/14 15:46:20 12/10/14
So yes, I did get stopped out at $24.38 and that was almost the exact peak of yesterday. I then got back in today at $22.20 at 13:14 hrs. I'm holding it overnight.
You didn't ID yourself so I don't know how long you have been reading my blog but my view is that the DJIA has peaked and so the general direction is going to be down from here. I doubt I will be out of UVXY for very long at any point in time but when I see the opportunity to avoid a pullback, stops are the way to do it.
Let me know if you need any more trading tips like this one, basic though it may be. I'm always glad to help newbies.