Those of you who read my blog frequently know that I spend a great deal of time thinking of ways to help people increase their trading profits. I spent this weekend thinking about the best way to show / teach people to use my Profitable Stock Exit Strategy Tool to improve their trades. Then it hit me!
An Live and Unrehearsed Demonstration Using the Simplest Entry Strategy Possible
As I said in the exit strategy video, it has been said that a systematic exit strategy will lead to better and more consistent profit margins than an entry strategy. I personally don’t exactly agree with that premise, as I like to use high quailty entry AND exit strategies, but I’d like to prove that exit strategies work.For this demonstration, I picked 3 long and 3 short stocks using the simplest method I that could possibly work (or at least that I could think of).
How I Picked The Long Positions
I went to the Prophet.net Sector Rankings, and chose the long stocks from a sector that has a high, positive Rank Change, as was in the top 10 Sector rankings. In this case, I chose Property and Casualty Insurance: 
I then went to ClearStation, and looked up that sector, and ordered the stocks by RSI. I filtered out stocks under $5 and that trade (on average) less than 250,000 shares per day:

Based on those criteria, the long positions I chose are
How I Chose The Short Positions
To chose the shorts, I basically used the same concept, except I chose a sector that had a small negative rank change, and was in the bottom 30 ranked sectors. For this example is computer peripherals. I then went back to Clearstation and chose stocks in the Electronic Instr. & Controls sector, and I came up with:
Position Size, Profit Targets, and Trading Strategy
For this example, I’m setting a position cost limit of $2500 per trade. The number of shares purchased will be $2500 / current price.
Profit targets have been set using chat patterns, fibonacci, and is some cases, P/E ratios. If you want to see my technical anlsysis of the charts, please email me, and I’ll put together the snapshots.
The trading strategy is very simple.
- I will set trailing stops using the Chandelier Stop approach
- The trade will be kept open until the profit target is reached, or it gets stopped out
- If the trade is not profitable within 10 trading days, it will be closed
- As the trades become profitable, I will adjust the Chandlier Stop to a more appropriate multiplier of ATR. Which multiplier is used is up to my discretion
- Once the profit target is reached, I will sell 1/2 of the position. The other 1/2 will be left open, with a stop placed at a 1.1 ATR Chandlier Stop. The trade will remain open until stopped out
Position Particulars
RDN
Type – long
Entry Price – 11.79
No. Shares – 212
Profit Target – 17.63
Initial Trailing Stop – 9.25
HIG
Type – long
Entry Price – 28.62
No. Shares – 85
Profit Target – 38.2
Initial Trailing Stop – 24.22
MTG
Type – long
Entry Price – 7.99
No. Shares – 313
Profit Target – 14.14
Initial Trailing Stop – 6.19
ENER
Type – Short
Entry Price – 11.92
No. Shares – 210
Profit Target – 10.06
Initial Trailing Stop – 13.93 (Channel Stop)
NVEC
Type – Short
Entry Price – 54.26
No. Shares – 99
Profit Target – 45.52
Initial Trailing Stop – 61.97 (3 atr)
AME
Type – Short
Entry Price – 35
No. Shares – 71
Profit Target – 31.68
Initial Trailing Stop – 37.41
Popularity: unranked [?]
Tags: exit, sell, stock, stop, strategy, tool, trailing














[...] should also take a look at my post – Using My Exit Strategy Tool to Sell Stocks for a Profit, which outlines the rules for this live trading demonstration. Finally, here is a link to the [...]
HI THERE, I ENJOYED READING YOUR ARTICLE, AND GOT EXCITED ABOUT YOUR TECHNIQUE FOR TECHNICAL ANALYSIS, CHARTS, AND TOOLS.
THANK YOU!
SOCORRO
Thank Socorro, I’m gald you are finding the bog and videos educational and helpful for your trading. IF you have any questions, feel free to post them here!
I am reading great websites like this one, trying to get my head around all the terminology, does anyone know of a good resource for this? Thank you.
Hi,
There are a few good resources you can check into.
The first would be the Marketclub 10 Day Technical Trading Bootcamp
The second would be stockcharts.com chart school
let me know when you get through those and I’ll give you some more
Hello from Russia!
Can I quote a post in your blog with the link to you?
Hello Russia from Seattle, Washington. Absolutely you may quote the my blog. please leave me a comment about where you posted so I can check it out.
-Steve
You may learn about trailing stop here: http://investinganswers.com/term/trailing-stop-...