Sunday, January 23, 2011

Stock Market Video - Setting Stops in a Volatile Market

Hi, traders. I think the overall market is kind of in "no-man's land" right now - maybe a little late to short aggressively but too early to buy every dip - so I did two videos on managing stop levels this week instead.  I have received some emails on this topic so I hope the video helps you out.  One basic idea I use constantly is to ask the question "what will make this chart look bad?" and use that as my stop loss level (in some cases). The other is to use the nine-day MA as a trailing level to place stops (in most cases).

Part one deals with the two losses and two breakeven positions I have had so far this year.  Part two deals with three gains I have had, although I now realize I did not include MGIC (15% gain).   Sorry for missing that one, but it was a short-term trade and I did explain the rationale on the blog this past week.

I do have a few nice looking charts that I will be watching this week in case the market decides to right itself, but overall I expect a little chop before the market decides what it really wants to do.   Those weeks are always difficult (and don't forget the deluge of earnings the market will be hit with this week) so treading lightly might be your best bet.  As I said Friday, my signals are bearish so that is overall the most important thing in my mind at this juncture.

Hope you find the video helpful and informative.   As always, feel free to email me with questions or comments - I enjoy hearing from my readers.

To see the videos in HD, please click "720p" and "Full Screen" on the video bar - HD will be available after processing.



10 comments:

Anonymous said...

Excellent examples.

Do you use conventional sell stops or something like contingent orders?

Mac said...

Occasionally I will use trails but usually it's hard stops.

Mike said...

Hi Mac
In your post you mentioned have a list of nice chart set-ups you are watching even though your overall view is bearish. Would you mind listing those stocks so that I can add them to watchlist in the event of bounce this week?

Thanks

Anonymous said...

Excellent videos. Thanks for sharing.

Mac said...

Mike - there's not that many - actually two of them were positions I just closed that still look like they may be OK. (JKS and CCME)

I don't know how many other ones I want to share just because I don't know if it is smart to buy right now.

Mac said...

SSW, MMYT, and SODA are a few others - really, not a ton of great stock but there are some worth watching. Even if we do pullback, it pays to watch those that hold up better than the others - those will likely be your new leaders.

Mike said...

Mac- When I look at some of the heavily owned institutional leaders like AMZN AAPL PCLN GOOG these are all at or above their 50DMA the clouds stocks getting whacked was not good as they were a leading group but overall I am not bearish YET and this may be a buy the dip opportuniy as a lot of weak hands have been shaken out. It also seems like almost everyone is bearish so I guess I am taking a bit of a contrarian view the overall trend is still up. In any case differing opinions is waht makes market, your Blog is a great resource and one of a select few that i read daily.

Anonymous said...

great video to tell how to set the stop. Thank you, Mac.

Anonymous said...

Good learning material. I am novice in this field and blogs like your's helps me a lot in learning stock market and trading in general. Thanks!!

Anonymous said...

Great video Ryan, really appreciate the insight. Stops are always challenging to me, often I'm erring on the "too tight" side, so this has encouraged me to be a little looser when the stock is acting well.