CIP quer preço definido na “compra de férias”

[Ulisses Pereira]

"After the Trade: To Stay or to Go?"


By Alan Farley
Special to RealMoney.com
2/19/2004 11:03 AM EST


"You've reviewed the trade setup a dozen times, calculated the reward/risk ratio and found the perfect moment to enter the market. With a slight adrenaline rush you hit the magic button and open a position. Now what do you do?


The first step is to digest the feedback you get from the broker fill report. With a market order, your entry may show slippage and demand a recalculation of your trade assumptions. If you get filled more than a tick or two away from your expectations, reconfirm risk tolerance and recalculate the intended exit.

Now the hard part begins. Look at the chart once again to confirm that you made the right choice. We often see things differently when sitting on the sidelines, as opposed to the heat of battle. Set a physical stop-loss immediately if that's part of your trading plan. If not, target the price or market conditions under which you'll exit the position. Update this mental escape hatch as each price bar modifies your assumptions, goals and emotional state.


Seeing Mistakes Early

Get out immediately if the stock's price hits the level where the trade proves to be wrong. That failure could turn out to be a whipsaw, but don't delay the exit in an effort to find out the truth. If your subsequent review from the sidelines suggests you're getting shaken out too often, revise your trading plan so positions get more room to run in the future.

A trade setup can always be re-entered after a shakeout, but each position must stand on its own merits. This rule requires a fresh analysis and revised targets for each entry. Keep in mind that subsequent trades often fail because the initial shakeout signaled a legitimate change in trend.

Take your losses manually whenever possible. This builds discipline because your action takes responsibility for the trade. It also acknowledges how your stop-loss represents an evolving calculation and not a fixed number. In other words, each bar, tick and time cycle affects the potential profit or loss for the position. Physical stop-losses rarely hit these moving targets with accuracy.


Watch the Clock

Always consider time-based stop-losses. The longer it takes for a position to move into a profit, the more likely it never will. Target a predetermined holding period and dispose quickly of nonperforming trades. Watch out when positions start to flatline. Use the weak swings to get out with a few pennies whenever possible. And keep one eye on the closing bell if your strategy requires going flat, regardless of profit or loss.

Intraday charts sketch feedback in real time. See how buy and sell ticks affect the curvature of surrounding Bollinger Bands. Watch out for thrusting candles that break through the band center and signal shifting momentum. Look for small but significant gaps between candles at key price levels. Find the point in time where the pattern says the bars should eject into a profit, or break down into a loss.

Each trade entry must speak clearly for itself. If it has little to say, get out and move on quickly. Always use both sides of your brain to manage new positions. An ominous feeling or a confident buzz represents a subconscious connection to the emotional crowd. Combine those gut feelings with careful review of the numbers, and then take action when needed.

Follow the ticker tape closely. In momentum trades, price should trend as quickly as it did just prior to execution. After buying pullbacks, look for confirmation that price action is ready to reverse. Measure the pulse of the market through the time and sales ticker. Then look for convergence-divergence with underlying price movement. When a surge of participation doesn't push price in your direction, it may signal hidden supply that will eventually trigger a reversal.


Shifting Risk

Use position scaling to address changing risk. Take partial profits when trades stretch toward reward targets ahead of schedule. Reduce size when price action gets erratic or external forces make prediction more difficult. Double up when patterns fire on all cylinders or unexpected news lends support to your strategy. In other words, trade larger when you're getting clear signals, and reduce size when forces are in conflict.


Each new position has a right size, regardless of account capital. This level shifts as price bars add fresh data to the trade feedback loop. Load up during winning streaks and supportive markets, because performance implies reduced risk. Lighten up and wait for better times when experiencing drawdowns or reversals of fortune.

Inexperienced players expose themselves to danger, because they commit total buying power to each position. These folks would survive a lot longer if they learned to trade well and stopped worrying about making money. After all, our profit comes automatically when we take the time to become proactive managers of our open positions. "

(in www.realmoney.com)