Latest News Question
Do you veer away from your trading system in this market?
Answers
160 points
Sensei answered one month ago …
Only at my peril!
Ever taken an exam and changed your answer at the last minute? Most times you changed it from the right answer to the wrong one, right? :)
If you have a "system" that works, stick with it. You'll be happier in the long run.
227 points
KenLong answered one month ago …
Systems need to be adjustable. Different criteria for different conditions. Although the basic parameters of trend and range will always be there, how you play them differs from market to market and stock to stock depending on what is being offered. Sometimes a market is trending and you can just hop on and ride the trend until it reverses, other times its flat and oscillating and riding a trend would be worthless. Still other times its choppy and erratic and your better off stepping back and waiting. Its like the ocean, conditions are changing from day to day and you have to assess them before entering the water.
Mechanical trading systems are designed for computerized trading. They are better used with discretion, much the same as most indicators. The human element of trading is about reading the market, making choices and adapting.
463 points
jillybeansisme answered one month ago …
Mostly I stick with it. I have an exit strategy of sell 1/2 if the stock goes up significantly (such as doubles), sell half again if it goes up significantly again, sell the rest if you need the money to buy something else. The rest of the exit strategy is sell if it drops 20% (25% for some), unless there is a major compelling reason otherwise. Don't panic in an adverse market. If you have what you think is an awesome investment at a good price with a probable temporary downturn, stick with it.
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170 points
MichaelShulman answered one month ago …
In my ChangeWave Shorts service, it's always about playing the short-side of companies and sectors with crumbling fundamentals by purchasing put options. Our profit goes up as these companies' outlooks go down. Fundamentals will always win out--if a company isn't selling its products and services, its earnings won't be able to sustain it.
Our strategy works regardless of whether the market is moving up or down (though this bear market has helped some of our plays work more quickly.) If you abandon your strategy to play short-term trends, you will inevitably be on the wrong side of the trend.
Volatile markets like this, however, do call for more vigilance when it comes to entry and exit points and you can never go wrong taking a profit.
