Quote:
Originally Posted by Hog's Gone Fishin
Wouldn't this be known as a cup and handle formation ? I know when I follow a ticker and see this it's normally a good set up as they normally break to the upside. The handle is the consolidation phase.
Also, wondering about your use of a stop loss. How often do you find yourself getting stopped out just to see it rise immediately afterwards ? That seemed to happen to me quite often so I basically quit using it and doing like Johnny said and making a mental stop and selling at that point.
On a side note , one thing I've learned to do is that if I want to get into a stock at the open I'll set my buy order 3-5% below the open and that wick will drop down and grab it 75% of the time so I'm wondering if it's grabbing someones stop loss ??
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Yes, loose cup and handle formed. That's not always what I'm looking for but those are good formations.
Yes, there are times a stop loss gets me out with the stock then moving higher. But if your number 1 rule is to control risk, I cannot break that rule. What if I ignored having a stop loss and the stop plummeted 10%+ more from when I should have gotten out? That happens too. With this strategy, you just scan for other stocks and find the next target. The mindset is there's numerous other patterns to find, don't get glued to one stock. Also, I have to use stops. I rarely can watch the market while at work. If I was truly day trading I'd just use mental stops.
I don't like to buy a stock on a dip. The breakout method has it moving up when buying. That way you trade with the trend instead of guessing if you're catching a short term bottom or a falling knife.