This market is juicy for trend following in stocks.
I am adding a small amount of the following stocks to my portfolio:
Dolby – DLB
Digital River – DRIV
Baidu – BIDU
Baidu is not at an all-time high, but I can’t resist. It is so vilatile that a few shares will do for now, but I need to be in this one. Can’t fully explain the feeling here.
Disclosure – buying DLB, DRIV and BIDU tomorrow.
i was screamimg on stocks with huge profits and I did take some.
Doesmt mean I cant reinvest in new breakouts.
DLB just c ame to me in a dream (in surround sound ) :) .
DLB? Where’d you get that idea??? :-)
Weren’t you screaming “take profits” just the other day?
Mike – price is all that matters. Quick picking a fight that I will win :)
Bill – hoohah. I use common sense in my trend following when large profits come very fast and adjust the position based on the position as it relates to the total portfolio. Selling a little after a 40 percent run allows me to stay with the trend and the new volatility increase that the stock will have from its fast rising price.
All mechanincal trend following systems have models for taking profits – even on rising stocks
riiight… when I sent DLB to you you asked “who are they?” In fact, I even told you the it was DOlby in the first email and you still asked me who they were. But of course, trend followers don’t need to know anything other than price…
I’m just amazed at a trend-follower taking profits. I thought the idea was giving it leash and jumping off only after the trend is over …
I’m with you on the current market being a “target rich environment” however. I’ve seen several tasty trade opps, but none of my current have stopped out …
Is hoohah good or bad?
I can see readjusting to the dollar volatility to keep risk i.e. distance from current to stop at a constant percent of equity. That makes sense, and I’ve thought about doing it myself, but I haven’t done any hard number-crunching to indicate whether I thought it was “better.” My personal inclination is to never sell a winner, or even part of a winner, until it does something to show me that it’s broken.
While all mechanical TF systems have profit-taking, not all of them will take profits on stocks that are still acting right; several rely only on trailing stops or channel breakdowns, including the ones I’m familiar with from previous reading. Matter of fact, the paper you & I both have linked to, trendfollowing on stocks, uses a simple trailing based on ATR with no readjustment or profit targets. Turtles used breakdowns and liquidated completely but never took partials off.
It’s interesting to see the variety of approachs and how yours is just a bit different from others. Lots of ways that work, and absolutely no one right way.
Luogo interessante, buon disegno, lo gradisco, signore! =)
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