How to Protect Your Profit in a Falling Stock Market
Today, I will show you how to protect your profit.
Steps
1) Open your VectorVest program, select HK market. Click <Unisearch> Tab
2) Select < Searches – Prudent > from the left panel, then choose Top VST-Vector Stocks
3) Amend the current date into 11-Jan-17 where confirmed calls UP signal occurred. Then hit button
4) Select Top 5, sorting by VST DESC, Symbol ASC
5) Now you have 5 stocks: 0259.HK, 0347.HK, 2382.HK, 0323.HK, 0148.HK
6) Hit the button
7) You will see there are 4 winners, 1 loser within the period of 11-Jan-17 and 10-Jul-17
8) The average return is 27.2%
9) Now go back to the point 5)
10) Ignore 0259.HK, hit button
11) The average return becomes 36.32% (4 Winners)
12) Let’s look on why 0259.HK is a loser (see the left graph first)
Basically, it is a trend base graph, price actions get some supports by 40 SMA, since mid-Jul 2016 to mid-Dec 2016. Therefore, we use MACD, a strong trend base indicator to see any crossovers.
On 11-Jul-17, a VectorVest Confirmed Up signal occurs. You, as a technical analyst, need to spot on what position you are going to long. When you run a Fibonacci Extension, most investors go short at 161.8% (I.e. $4.81). Therefore this Confirmed Up signal fails.
Let’s see the MACD crossover on 11-Jan, would you consider going long? No, absolutely.
What if you do not like technical analysis? How would you protect your profit? Most stocks watch-list APP on your smartphone must have moving averages. Simply insert a 40 SMA, you will know the exit is $4.48 (See the right chart). If you still hope a falling stock comes back to the original highest price, you need to wait (maybe a long period).
Why not prepare a stop loss, cash-in first, and then buy another potential stock in maintain a healthy cash-flow?
Steps
1) Open your VectorVest program, select HK market. Click <Unisearch> Tab
2) Select < Searches – Prudent > from the left panel, then choose Top VST-Vector Stocks
3) Amend the current date into 11-Jan-17 where confirmed calls UP signal occurred. Then hit button
4) Select Top 5, sorting by VST DESC, Symbol ASC
5) Now you have 5 stocks: 0259.HK, 0347.HK, 2382.HK, 0323.HK, 0148.HK
6) Hit the button
7) You will see there are 4 winners, 1 loser within the period of 11-Jan-17 and 10-Jul-17
8) The average return is 27.2%
9) Now go back to the point 5)
10) Ignore 0259.HK, hit button
11) The average return becomes 36.32% (4 Winners)
12) Let’s look on why 0259.HK is a loser (see the left graph first)
Basically, it is a trend base graph, price actions get some supports by 40 SMA, since mid-Jul 2016 to mid-Dec 2016. Therefore, we use MACD, a strong trend base indicator to see any crossovers.
On 11-Jul-17, a VectorVest Confirmed Up signal occurs. You, as a technical analyst, need to spot on what position you are going to long. When you run a Fibonacci Extension, most investors go short at 161.8% (I.e. $4.81). Therefore this Confirmed Up signal fails.
Let’s see the MACD crossover on 11-Jan, would you consider going long? No, absolutely.
What if you do not like technical analysis? How would you protect your profit? Most stocks watch-list APP on your smartphone must have moving averages. Simply insert a 40 SMA, you will know the exit is $4.48 (See the right chart). If you still hope a falling stock comes back to the original highest price, you need to wait (maybe a long period).
Why not prepare a stop loss, cash-in first, and then buy another potential stock in maintain a healthy cash-flow?