Quill’s Simon Sez method is a sound way to trade. But I also do quite a bit of bottom fishing. Sometimes, my guesses don’t work out. Sometimes, they do.
Here’s another guess that’s working out nicely.
Another guess that’s working out.
Out of BATT this morning with a 4.6% profit for a 6-day holding period. Out of TAN with a 3.2% for a 7-day holding period. I see that my entry into NRDS is doing well, despite today’s mostly down market.
Out of EVER today with a 10.7% gain.
Here’s 5-day trade done per Quill’s Simon Sez method --well, sorta-- that offered a windfall, 29.3% gain.
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That series of charts raises a serious question: “When to take profits?” “When to cut losses?”
Wm O’Neil, of IBD fame, suggests an 8% cut losses stop. If that is the case, then why not an 8% profit target, especially if the profit is achieved in a day or two?
Yeah, yeah. I know. The customary mantra is "Cut losses fast. Let winners run." But we’re living in very fragile times where fundamentals can’t be trusted as once it was possible to do so. So if the chart isn’t showing the gain that was hoped for, or if the chart shows an inexplicable jump up, I sell and move on to the next trade.
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Predictably, the Trump stock rally is now fizzling, but not the bright future his election promises, and there’s still money to be made from using Quill’s Simon Sez methods. (“Buy low. Sell high.”)
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As you know, there is a difference between swing trading and position trading. A lot of swing trades set a 2-4% stop loss, to they all sell at 4% gain? Should they? You just waited for 10% gain, did you hold too long?
Here are my notes on the 8 week hold rule to have a chance at large gains…
• IBD has two main rules for selling a stock: Take your profits at 20% to 25% and cut your losses at 7% to 8%.
• But there is also a third option, one that can take your 25% profit and turn it into much more. It’s called the eight-week hold rule.
• If your stock produces a gain of 20% or more within three weeks of breaking out of a proper base, you may have a true winner on your hands.
• IBD research shows that in many cases, stocks that make this quick and powerful move are capable of doubling or tripling in price. Unless your stock shows a clear sell signal, you should sit on your hands for the first eight weeks of such a move.
• Unless you are in danger of a complete round trip of gains, hold your stock for those eight weeks. It may appear to wane as it pulls back to or just below the 10-week moving average, but this action is normal.
• After the eight weeks lapse, it is time to reassess the stock. It’s likely your stock has returned to or surpassed the area of initial strength, and you can then decide when to sell and take profits.
• From his book:
○ Major advances require time to complete. Don’t take profits in the first 8 weeks of a move unless a stock gets in serious trouble or is having a 2 or 3 week climax run up on a stock split in a late-stage base.
○ Stocks that show 20% profit in less than 8 weeks should be held through the entire 8 weeks unless they are of poor quality without institutional sponsorship or strong group action.
○ In many cases, stocks that move dramatically by 20% or more in 1-4 weeks are the most powerful stocks of all - capable of doubling or tripling. Try to hold it through the first couple of times it pulls back in price or slightly below the 10-week moving average price line. Once you have a decent profit, you could also try and hold the stock through its first short-term correction of 10%-20%.
You know my story with NVDA, up 18,000% not 8%. Andy @buynholdisdead has posted some buys that broke out and activated the 8-week hold rule and I believe he is glad he held, he can refresh us.
Pete you are giving me to much credit. I would have sold if you hadn’t reminded me of the rule.
Here is what I would say about selling after a 1R profit. Why are you investing? Most people would rather have a 3R profit that are swing traders, I am looking for long term winners. Ones that will give me 10r or better. To understand what I am talking about you can read Minervini and Van Tharp on position sizing and R profits. They have really given me a masterclass on how to judge risk.
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Arindam, it’s your plan, your setup, your trade, your money and your goals. You do you. All answers are correct.
Scalpers are happy at a fraction to a couple percent, there is no reason you couldn’t say you are happy at 8%.
I am doing a 3 month trial of IBD Live for $10, it’s an 1 1/2 hour every M-F morning discussion of the markets and stocks. It’s very interesting and educational, but it’s also educational in that there is a wide variation in how each individual employee of IBD approach things and bend the “rules” of God. It’s also funny how much they rely on Thinkorswim for candles and options. Anyway, the point is, yes O’Neill had “hard rules,” but they were his rules and they can be guides for anyone but not absolutes. But then, you already know this.
Lakedog
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I did a 3 month trial of IBD digital thinking it would be like the newspaper but it wasn’t. I was disappointed in the product.
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I don’t know if the IBD Live trial is on, but I would suggest you look at it. Plus, I think if you are a MarketSurge member, you can get a subscription for cheap.
They go live at like 6:20 am PST and usually discuss for 1 1/2 to 2 hours the market and specific stocks. There are 4 discussants (often one is non-IBD guest) and you have the chance to ask questions that are sometimes answered live or in chat. You get a spectrum of thoughts and I find it usually very interesting discussions. They do record it as well as print a ready list and watch list and edited chat every day. It’s actually more info than I have time to digest. But if the ten-bucks deal is still on, I think it’s very worth it.
Best of luck, know you are doing well in trades, hope so in all aspects.
Lakedog
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Thanks Lake, Life is good and I have had a nice run lately but I do not expect it to last. The market is trending up so it’s easy to make money when the sun is shining. I am just glad I found all of you and was willing to listen. I have learned a lot over the last year.
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Every now and then, they publish a segment from it for free access. I do find the discussions interesting, but right now I am out every morning, so it would be less valuable to me. I definitely advise a cheap trial when available.
…and I say again: “They do record it.”
There’s multiple things off Youtube I watch previously recorded at 1.25 or 1.5 X speed and slow when it sounds interesting.
And I just checked, they are still 3 months for $9.95.
Damn, feel like I’m pushing it, but guess I am. They actually do a lot of teaching and discussion of stocks, approaches to current situations, etc. Even Mike asks questions of guests and learns.
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Recently returned to Wall Street Journal digitally, doing the “WSJ plus” which is WSJ, MarketWatch, Barron’s and IBD digital for $7 a month. More than I can read but have the price for a year. Agree with you, digital IBD or in their app is horrible. Really need a new app format. However, if you sign in on the web and go to MyIBD, you’ll find an option for “eIBD” which is the digital newspaper format. They keep the last 20 editions there.
I don’t follow all the IBD rules and moves, but I appreciate their research and find many of their lists have solid vertical targets.
Lakedog
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Could you give me a link to that Lakedog? I can’t seem to find it.
Try this one.
https://research.investors.com/eIBD/#/
I find it very difficult to find and they tend to seed cookies everywhere that “force” your digital movements, so it may not work across computers and accounts.
Also, if you go to “www.investors.com” that should be linked to your account and if you click on “MyAccount” it should bringup a dropdown and it if you have a subscription, it will show both eIBD and IBD digitial.
Best of luck, let me know if it doesn’t work!
Lakedog
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Ok that is my problem. I only have marketsurge and when I go there they try to sell me a subscription. Seems the deal you have for 7 dollars a month is a steal.
Bit of a crazy link, but try it. Or just google WSJ plus cyber sale. The price jacks-up in a year, I always set a reminder in my calendar to review such subscriptions. But that’s very fair, will know if I should drop it or not by then. Who knows, maybe it’s a cheaper way to get all four than just getting IBD.
One thought should you try this, I use different emails to track and use different subscriptions such as stocks, music, books etc. That’s fine but IBD takes over your computer and only allows one “myIBD” at a time. I do have the trial of IBD Live which doesn’t show on the screen pick as I wasn’t thinking and added this on my book/newspaper subscription email. Make it simple, make sure you add under the same email and password. Minor issue but sometimes a hassle.
Lakedog
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Thanks Lakedog I appreciate it.
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