Here are some of the first details about the change in my strategy and how I'm approaching things now. This is the main focus of the latest version of my trading strategy: Y-Swing 3.0. It's focused on how to approach stop losses and how to manage your gains, when you have them.
When you set your stop losses, it shouldn't automatically be at -7% to -8%, those should be your maximum. If you get a SELL SIGNAL when your down -3% to -4% for example, you shouldn't wait for it to go lower to sell. Your goal is to limit losses, and cash in as much gains as you can when you have them. One other important factor is the dollar amount you are willing to sacrifice. -7% of $1000 (-$70) is not the same as -7% from $5000 (-$350). Basically, when you trade or set your stop losses you should focus as much on the percentage level and dollar amount you would be willing to sacrifice in case of a pullback. This also applies to when you are in gains. When your up let's say $500, how much are you willing to sacrifice of it to have the potential of seeing it move higher. It would make no sense to say that no matter how much gains you have that you would be willing to sacrifice the same percentage. So, when your gains become heavier, you should focus more on the dollar amount you are willing to possibly sacrifice. It can be a fixed amount, and you may increase it a bit as you move up. You may get stopped out at times and then see the stock move higher again, and that's ok. In that event you may choose to go long again even at a higher price than where you were stopped, because now you know that the up trend is not over. But the whole point of all this, is that you did not take unnecessary risk and you cashed in your gains when you had the potential to lose more.
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