Brandon has been testing various exits on IBD 200 system and has some interesting findings on his blog.
8% Protective Stop+25% Trailing Profit Stop
Most people have heard the expression to cut your losers short and let your winners run.
In our last example, we will also use two stops to achieve this. We will begin with an 8% protective stop but instead of a 20% profit target, we will use a 25% trailing profit stop. This stop will follow the price up but will only become active when it raises above the initial 8% protective stop. This will give our winners PLENTY of room to grow without increasing our initial risk. The point in which the trailing stop becomes active is when our stock price reaches a 17% increase over the entry price (25-8=17)
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