Thursday, May 04, 2006

scaling out

So I've read a lot about scaling out of stocks lately. I already
started implementing it. One site I read recommended scaling out of 1/4
of your stock each time it reached a profit level. As an example, they
gave 6%, 18%, and 32%, and letting the last 1/4 ride. That might be
okay if you had large positions, but I think for my account, the
commissions would eat me up if I split it into that many trades.

Instead, I've decided to scale out 1/2 of my shares if I reach a 25%
profit point. As I get bigger positions, I might split it more, but I
figure for me being a newbie, and this being a sideways market, it's a
good way to lock in some profits, but not decrease my winners too much.

I already took profits in AP this way. Also, I got completely out of
ERS on a down day last week, for 25%. Of course, today it's up $5 and I
wish I was still in.

I've also decided to not do scaling in. I was watching maui picks and
buying some test lots of them, then buying more if they went up 3%.
Then I thought maybe I'd just wait and buy in if it went up 3%. I did
that with JOBS, but it turned out to be too far away from the buy point,
and I got shaken out today.

So I do have a couple of remaining test buys in DIL and TBBK. But I've
also done significant buys of KCS and USB.

1 comment:

Joshua "MauiTrader" Hayes said...

Nice blog bro

Keep up the great work!!