If I were to come up to you one day and ask, “I am in a good relationship. If I buy my girlfriend a horse, should I sell one of my others, or should I keep them all, and then buy one more to round out the herd?” You might look at me as if I were just a bit nuts. After all, what do you know about my girlfriend, my horses, or me? Therefore, any answer you give me will simply be an answer based on nothing, no facts, no knowledge. It might help me make a decision, but does it address any of the real issues inherent in buying and owning horses, much less how buying another horse for my girlfriend might go over?
Well, this is how I feel when I get questions such as the one today, or others such as, “Should I hold onto gold through next week?” or “I own an oil ETF, should I sell it based on the price today?” They are simply not answerable, as everyone’s trading strategies are personal, and I know nothing personal about any of you. However, after having written the above, I will address the question generally from my perspective.
I am in an strong uptrend. If I go long at A should I liquidate at B (half cycle), or should I let it remain and add to my position at C – the retrace.
If I am trading a market in a strong uptrend, meaning my market is now in the black, I would first evaluate the market relative to current overall market conditions. If the broad market is favorable, meaning, I am not concerned with a sudden reversal, I will let the market ride with a close eye on it and the broad market. If I suspect the up trend is weakening, I will consider new options, such as selling half my position if I believe the market still has a ways to go up over time, or simply cashing out, or tightening a trailing stop. My actions depend on both my knowledge of the trade (such as what I know about the specific market and my profit goals) and my intuitive sense of the trade.
Generally, doing what you ask about is a somewhat common strategy. In fact, it is one of the first trading lessons I learned from my mentor – sell half when the profit target is reached, buy back when the price has reversed to a specific point. Even here, so much is dependent on what I know about the trade itself, so, at best, the lesson is applicable only in some cases. Understanding the variables is what ultimately should drive your choices …
On another note, since so many of you have asked what software I use, and/or is VantagePoint Intermarket Analysis software any good, I thought I would give out a link that will introduce you to the software. Mind you, this is not a pitch. You can check it out and decide for yourself. I am simply passing this link on for those who have asked about the software, which is more than few of you …
Go here to get some free forecasts from VantagePoint>>>
Trade in the day; invest in your life …
