Risk Management Is Even More Important in a Choppy Market
This trade was NOT a big winner, but it shows how a consistent, disciplined approach can allow us to exit a trade profitably when others who took the same entry may still be holding with a loss of over 5%. We have our share of big winners, but we also know how to lock in the smaller gains before they become a loss! These are the same swing trading strategies we employ everyday at Alphatrends.
Shares of Best Buy were in a strong daily uptrend and had experienced a pullback which had found support. On January 13, Alphatrends subscribers were prepared to purchase Best Buy (BBY) as it made “a higher high above the flat/rising 5dma.” Making this intermediate term higher high, put the daily and intermediate term trends in alignment.
On the 14th the stock was purchased at 4430 and a protective stop was placed at 4348. The intention was to hold the stock as a swingtrade and to take a quick profit on 1/3 of the shares on a quick move.
The first sale was made on the 15th. This small sale allowed us to reduce our overall risk and to “pay for commissions, etc” In the midday video update for subscribers that same day, the stop on the balance was raised to 4506 because that would indicate a lower low below the vwap that day (an indication that the short term momentum had failed.)
It felt unfortunate to be stopped out with our gain of $0.98/ share on the balance of the position because it “seemed like” it could have gone much higher…
Price action is how we make decisions at Alphatrends so we sold.
Fortunately for us, we sidestepped a gap lower the next day and avoided a pullback of over 5% from our purchase price in the next few sessions.
Our GOAL was to hold longer term, but the market doesn’t care about our goals. Our JOB is to listen to the market and when it speaks to us through price action we move aside.
Maybe BBY will set up for us for another long side trade which we can hold longer, but for now it feels good to have our profit and have avoided a losing trade.
The market is choppy right now and strategies like what we did in this BBY trade might make the difference between a good year or a GREAT YEAR!
At Alphatrends, we don’t just pay lip service to “risk management” it is our culture!! Do you have strategies to objectively listen to and act upon the objective message of the market? Our focus is low risk, high probability swing trades every single market day at Alphatrends.
Take advantage of our sale pricing on annual subscriptions and become more consistent in your market approach. We have been mentoring and profiting with traders like you for over 20 years!!