When trading a momentum burst kind of setup exit in to strength is one of the better options I have found. These momentum bursts moves by very nature are short term moves. They last only 3 to 5 days and in that short period make 8 to 20% moves.
FDML is an example of a recent momentum burst trade I did. In this case it had a high volume breakout on 7th January. That was the entry day.
Next day stock went up at one stage almost around 14%. 14% gain for one day of holding a stock for swing trade is very good gains. So I sold 3/4th position at 23.50 and moved stop to 23 which was subsequently hit during the day. Giving overall profit of 12.93% for holding for essentially less than 24 hours.
Next day stock was downgraded and open lower. If the position was open , it would have been a loss or wiping out open profit.
This kind of short term swing trades where you try and capture slice of a explosive move are not for everyone. There are lot of people who believe you should let profit run. Which is right philosophy for a position trade or a trend following method. It is not the right approach for swing traders.
If I select stock based on some catalyst and position trading it, then I am willing to give it lot of room and let profit run. For example I am still holding FB bought in July 2013 on earnings day and letting profit run.
FDML is an example of a recent momentum burst trade I did. In this case it had a high volume breakout on 7th January. That was the entry day.
Next day stock went up at one stage almost around 14%. 14% gain for one day of holding a stock for swing trade is very good gains. So I sold 3/4th position at 23.50 and moved stop to 23 which was subsequently hit during the day. Giving overall profit of 12.93% for holding for essentially less than 24 hours.
Next day stock was downgraded and open lower. If the position was open , it would have been a loss or wiping out open profit.
This kind of short term swing trades where you try and capture slice of a explosive move are not for everyone. There are lot of people who believe you should let profit run. Which is right philosophy for a position trade or a trend following method. It is not the right approach for swing traders.
If I select stock based on some catalyst and position trading it, then I am willing to give it lot of room and let profit run. For example I am still holding FB bought in July 2013 on earnings day and letting profit run.
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