5) Being Right or Making Money – When to Sell (Exits, End of Uptrend) 1/2

Yeah! Finally! Last step! Now we decide when to sell…

“…eh siao lian eh…what last step? Where were the 1st few steps?…”

Huh!!!???

“..siao lian eh…joking la…i know this one…I not greedy…got profit I run liao…agar agar la…if buy at $1.50, I aim $1.60, then wait for it to come down to $1.50 again, I buy again…simple…”

Not so simple bro. Different trading set ups have different profit or price targets…eg for chart patterns and S/R lines, the initial target is the projected upside…the same size as the chart pattern… or the next up S/R line…confusing? Ah…you can read Magee or Peterbrandt.com, excellent source for chart pattern trading.

See this familiar pic again, the “height” of the Head & Shoulders patter is about 200 points (3315 – 3115) so the target (we are talking about shorting the H&S pattern here) is 200 points down from the “neck line” at 3115, so minus 200 = 2915…bingo…we nearly hit that target din we?

Then there is Elder’s triple screen…the initial target is the upper channel of the moving average channel.

STI MA Upp

So the price target for now, for example is 3354…the upper line.

Hey…this is another viable price target 😀 hahahaha!

Price Tgt

But please please remember….analysts targets are based on 1year projection and will change according to their whimps and fancy the forecasted business outlook.

“..look at the favorite picks of January 2008..S&P 500 plummeted 39%. For anyone trusting the index, it was a total disaster. But if you’d stuck to the analysts’ 10 favorite stocks instead, you’d have only lost, er, 48%..With that caveat, the most-hated stocks that are still in the S&P 500 today fell 51% in 2008—just three percentage points worse than the top picks.

I also checked some of that year’s more-spectacular blowups. Lehman Brothers? At the start of 2008, 17 analysts covered the stock. Of them nine had it as a “hold,” five as a “buy” and two—amazingly—had it as a “strong buy.” Given that one of the smartest things anyone could have done with their money, ever, was to sell Lehman stock at the start of 2008, how many analysts actually issued that recommendation? One. Out of 17.”
http://online.wsj.com/article/SB10001424052748703808704576062033926741952.html

For me personally…price targets and economic forecasting is just like weather and socer results predictions or forecastings….many people and gurus have many views….always popular…always tend to be inaccurate….

“Got black clouds, sure will rain, bring umbrella” My mother to me.

“Got rain so what? No cat 1…still continue outfield!” Me to recruits.

“It would be fruitless to set targets when our process is controlled by the market. If we can participate in most of the uptrends, we will do well. We strive for equity-type returns with lower beta, lower volatility. We don’t set targets” Greg Morris

“..eh siao lian eh…so no targets…then how and when to sell..siao!”

When you (through your trend spotting glasses) determine that there is no more uptrend (provided you are a trend trader), so you sell, hopefully still in the money, if your uptrend has not generated profit yet…you still have to sell since your trend spotting glasses can no longer see any trend.

The next and the last…my tool for deciding to sell…is damn boring….familiar?

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