Hello,

I feel sooo blessed by finding InformedTrades.com - Information here is very valuable. I almost lost my hope for stocks, but after I discovered this website - tables turned around - I got addicted :]

Ok, here is the question.

On August 1st (today) stock for "UAM" is up 20% right now.
What indicator should I look at to sell this stock? Of course I would like to ride the bulls up to very very top, but how do I know that the top was reached?

Thank You

Hi there Vipetrul and welcome to the community it is really a nice site with very helpful information hope you find your way here...
i know a couple of indicators that can tell you if the market is oversold or overbought they are the RSI and the STOCHASTIC you can find more information on them here :
Learn to Trade the Stochastic Oscillator Video
Learn to Trade the RSI Indicator
hope thats help
best luck..
Houssam

Thanks Houssam for the response.

I do know these indicators and they both currently show oversold.

The question I have.. is how usually stocks behave after big one day runup.
Do they usually dip a litlle in couple next days?
Do they continue climb up while loosing the steam?
Some other option?

hey vipetrul and houssam,

If i were to add something from what houssam has said, yes a techinical trader will be looking at indicators such as RSI, Stochastics to show oversold and overbought areas.
However, u should take in to consideration that these sorts of indicators, i believe are called 'lagging' indicators (take note that any type of techincial indicator has 2 common denominators because they are all plotted on the chart, which are Price and Time) because they only update them selves as soon as the time frame closes and it is recommemeded by alot of ppl that u use these indicators in line with ur orignial analysis.

In terms of the reliability of these indicators, i guess it will vary from different trader's opinion but it is my understanding that even though these indicators may show over-bought and over-sold, the inital reaction from the market may also vary.
For example as you said that ur particular stock jumped up 20% and ur indicators are showing over bought conditions, say for arguments sake it was 90, one might say it is due for a retracement however the next day it might run up again and then the indicators might show 95. Then the next day,it might plunge significantly to show that it is over sold.

In summary to all that being said, you cannot really put a time frame on when it is going to react to these overbought/oversold indicators and by how much it will retrace by but all i can say is that it is something that you can 'expect' which is why, like i said, many ppl recommend using it in line with ur analysis or other indicators.

To answer your question, usualy but not always, any significant move will have some sort of retracment or consolidation on the following day. To name a few great indicators to know the 'momemtum' of any move are the MACD, ADX.
David has a series of videos on such indicators like these.

Hope that helps,
Peter

Oh btw Houssam since ur on this thread,

i need a quick revision of some FOREX theory questions.

When u go long or short in any currency pair (say for example in real account), the only transaction cost u pay is the bid/ask spread right? not like stocks where u usualy have to pay 20-30 dollars as brokerage fee ?!?

Thanks heaps,

Peter

Hi there Peter
Well thats approximtly right but it also depends on your broker some brokers take money for holding the postiton through the night,weekends,......etc i think even somebrokers take fees for oppening the position also but most of the brokeres i dealt with only take the spread as the only fees hope thats help....
Houssam..

vipetrul,
Dave provides a full session called "Module 6: Money Management" here:
InformedTrades : Learn Trading. Trading Education. | - Basics of Trading Course

I am not sure there is a tool that can tell you when a stock went all the way up, and will start going down, but you can use the trailing Stop to make sure you have the profits in your hand, in case the stock will start going down. You also can trim the trailing stock gap to a smaller gap, as the stock goes higher, just to maximize the profits.

Thank you, Teddy -
I will check it out.

vipetrul,

The question of when to sell depends on when you bought. At what price did you enter the trade? Where was your stop (either mental or actual) when you entered the trade? Is the current profit at least double your original risk?

Usually questions of this nature are looking for some kind of advice to relieve anxiety/fear. It does not help your current situation, but I strongly encourage you to enter future trades with a predetermined game plan. No football team says "go deep" on every down. They have a whole playbook before they ever set foot on the field.

The great thing about stocks is that nobody trades a single share. Usually even small traders own 50+ shares. I generally dump 1/3 - 1/2 of my position if I get an itchy trigger finger. It helps me lock in some mental profits, calm down and assess the situation more clearly.

__________________
Shaun Overton
OneStepRemoved.com
Strategy and Automated Trading Development

I've entered at $11.17 and sold at $12.64 (which is 13% net gain).
Since I'm a new trader - I didn't have any "strategy" or goals. And let me tell you - I lost a lot of money by not having an exit strategy.

But looking at David' videos, I'm learning a lot - most of my previous losses could be prevented if I would be more educated.

My biggest problem was... is when my stock plunges down - I had a hope that it will bounce back eventually. So I stopped trading for month, waiting for that bounce back. It is very discouraging :]