cat brain.log | less

Getting it down on `paper`

The 3-2-1 Money Management Plan

Buy an evenly divisible by 3 sized lot of shares, with proper money management stops. On spike or initial target, sell 2/3 and move your stop on the remaining third up to break-even. If it pulls back to a nice re-entry, re-buy a third and maintain the updated stop. If, instead of a pullback, the stock continues to rise, let it run. You’re on house money. Set a trailing stop and move on to the next trade.

There are many alternatives to this theory. Another one is to sell half your shares once the stock has moved in your favor by the same distance as your stop from the original entry. In other words, if you buy at $10.00, and your stop was at $9.00. You sell half shares if the stock gets to $11.00. Upon hitting this target, you move your original stop up to $10 (break-even), and let it ride. Of course, if the trade initially goes against you, you still have your $9.00 stop that, if triggered, would sell all shares (at the loss).

 

Comments

No comments so far.

(comments are closed)