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There are four important elements to Stock Trading: (1) Determining the direction of the market, (2) Selecting stocks, (3) Establishing a trading strategy, and (4) Implementing and sticking to that trading strategy. Previous episodes of the TradingTips.com video newsletter have covered numbers 1 & 2 extensively. This episode will look at a particular trading strategy: Letting Your Winners Run by Using Rolling Stops.
In this episode, you’ll learn:
- All about stop-losses: regular stop-losses, firm stop-losses, modified rolling stop-losses, and rolling stop-losses.
- How having a good stop-loss is only half — no, one-third — of the game. You also need to know when to sell for a profit, since you can never make money in the stock market without selling for a gain! But do you take 100% of the position off the table, or do you let a portion of it run?
- What “letting your winners run” really means. How would you like a conservative strategy that could produce gains of 85% or more, while limiting downside risk at the same time? Watch the video to see for yourself.
Included in this video is an example of how the strategy could have produced huge gains with Apple. Rather than selling when the stock had produced 10, 15, 20, or even 50% gains, using a rolling stop-loss to let the winner run would have provided a shocking 85.2% gain on the second half of the position. We’ll break down exactly how this would have worked.
And it isn’t just hypothetical, either. We have started using modified rolling stop-losses at Portfolio Crafter, and we’ll show you how it has worked out for one of our picks, PayChex (Ticker: PAYX), which was just sold for a big gain last week.
Is there a downside to using rolling stops? Yes. If, for example, your stock falls to its rolling stop, but then soars much higher, you would have sold too soon. But the system is a conservative way that you can both lock in profits AND potentially get huge gains.
Happy Trading!
Manny Backus
CEO, Wealthpire Inc.
Duration : 0:7:52
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