Exits are inherent to setups Part4 | stockbee


Exits are inherent to setups Part4

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This is the essence of Stockbee Trend Intensity swing trading setup. If you don't understand this do not use the method. If you can not buy on "buy day" early in the morning the setup entry is not valid. If you can not sell on "sell day" by end of day at least part of your open position then the setup is not valid.
If you study swing trading in real depth, you will see that traders have developed 100 different variation of this basic idea. Swing traders operate on 3 to 5 day hold periods and profit targets of 8 to 20%. There may be hundred different variations but basic logic is the same. You find a predictable setup which shows up often and trade it again and again and again. You make money by compounding
These kind of setups show up on daily basis, so as long as you do good job of risk management and just follow the rules and not get excited by loss or win in an individual trade, you can trade these kind of methods and grind out profit month after month. 
The basic logic behind these setups is momentum bursts. Trends move in momentum bursts of 3 to 5 days. That is the fat part of the trend. Rest of the time the stocks spends going sideways or pulling back. The trick is to quickly identify such burst and get in and out of them. That is what the Stockbee Trend Intensity breakout method does. 
The exit logic in this kind of method is inherent to the setup. You cannot separate it from setup logic. 


Pete said...

Pradeep, excellent blog as usual, thanks.

Worden Webinar featured pro swing trader Larry Connors a few months ago and he has an interesting take on holding periods that might interest your readers; it was point number 8 during the presentation. The webinar is available in Worden archives:

"On average, statistically 5-8 trading days is usually the sweet spot to locking in gains. Less time usually doesn't allow the move to be maximized. More time and the gains begin to revert to market averages."


Pradeep Bonde said...


My market Monitor database also shows similar thing. 15 to 20% kind of moves are more common on less than month time frame. The move happen in momentum bursts of 3 to 7 days. Rest of the time the stock is in base or pullback mode.

Last night I did a video on Members site showing that with many examples of recent stock moves where moves of 100% plus happened in less than a month, but effectively the 100% plus gain was made only in 3 to 7 days time frame.