Traders
Diary
“Another
open position I now hold is the March 33 call on QQQ (QAVCG).
This
one got hammered a bit but is now back in the
black by 32%. The QQQ is now up to $37.68 so that 33 call is well
into the money and will really gather steam if the QQQ advances
further. I have until the third week of February to dance with
this one, according to my 30-Day Rule. I will put a stop-limit
at my entry now so that no loss can happen. After sweating it
out
and now having a profit; letting it turn to a loss would be an
ulcer-producing situation to be heartily avoided.”
Does this Make any Sense?
Perhaps the
above paragraph could as well be in a dead language as far as
you’re concerned; maybe not. It was composed for
the direct benefit of Protégés who are studying the
Stock Market stream at Enlightened Millionaire Institute. Let me
show you the chart on this one, and you’ll better understand.
What it all Means
The red horizontal
line on this chart of QQQ shows well established resistance.
I bought
into this one when prices were below the resistance
line, which sits at $36. Each time QQQ went up to $36, it hit its
head on the ceiling and tumbled back down. On December 29th, QQQ
finally broke up above $36, and resistance. Once it did that, my
option began to make money. I had to wait for several weeks to
see this happen, which in most option trades is quite a long time.
Now that the position has achieved a nice 32% profit I certainly
do not want to see it go back in the red; therefore, I place what
is called a "protective stop" at a price that will assure that
I do not take a loss. By doing this, I am still allowing for
the possibility
that QQQ will go up farther and make me more profit while protecting
the downside.
Logical Exits
For me, and
many others, exiting the trade can be challenging. That is why
I have identified
3 exit principles and developed some
practical trading rules to honor those principles. In the next
issue, I’ll tell you more about how to exit your trades gracefully.
Yours in better trading,
Dr. Stephen Cooper
www.OnlineOption.com
PS: To get
your free money and investing newsletter, simply go to www.OnlineOption.com,
and click the Sign Up button.
|
