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How to turn stop loss into Profit !


 

 

I have always been a perfectionist trying to find the perfect technique and setup to maximise a run and take maximum profit so as not to waste any part of a stock breakout and run.

So i devise one of the method which uses stop loss techniques and short selling as the same entry exit point. Effectively once i am stop out with my profit taken, the position will turn short immediately on the same stock.

The rationale is that if a stock is exhausted after a long and fast run and breakdown a rounding top pattern, the probability of a downward price movement is very high after triggering the stop loss point.

So we can use the same stop loss point and effectively double the share quanty to do a Sell Stop. In this way, the order takes profit for the long positions and enter a equal amount of short positions when triggered. If the share is destined to go higher, then we can adjust the stop loss point higher accordingly until the stock is exhausted. Utimately, what goes up must come down. Hence, we effectively lock in positions and protect our profits as well as add incremental profits by shorting the same stock.

Below is an example of my recent trade on CENX (13.16 ?0.15%) ( Refer graph below ). I enter on breakout at $10.88 and ride the trend till the rounding top pattern around $16-17. I set a stop loss point of $16.64 with double my long positions. Hence, if the stock decide to go down , the stop loss positions is taken out and my profit is lock in while the position become a short position for extra profit on this run. Effectively, i have maximise the profits for this position on both the run up and sell down at the top.

Take care to choose a stock that runs too fast and too furious and hence would be prone to exhaustion.

forex/stock/gold/oil trading

Website : http://stocktradezone.com/
Author : Tradesman.

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