How do you handle parabolic rises?

[floydddd]

through sheer dumb luck, i've recently wound up in positions that have jumped up radically and i have yet to figure out how to manage the trades. As a for instance, please to have a look at PACB. I'm current 199% to the good on it, after having sold off 1/4 positions on the way, just to lock in some profits and make sure i can't lose anything. but now that i'm in that position, i'd just as soon come up with an actual strategy for handling the rest of it. everything i've looked at in terms of stops has me giving up a ton of money before they get hit. so: thoughts anyone? what would you do in this situation?

 

[rad14733]

@floydddd If I was up that much I'd sell the entire position, but that's just me... I think your best option would be to enter a Trailing Stop Loss at a specific amount or percent based on your comfort level... You have all of the ATR data to go from so you could base you Trailing Stop Loss on any portion of one of those numbers... Or you could set an OCO with Limit and Stop instead...

 

[floydddd]

thanks for weighing in. guess i might sell 1/4 at minus 1, 1.5 and 2 ATR and then just hang in with the remaining 1/4. just wish there were other ways that made sense, too.

 

[Slippage]

I've just this week been looking to manage that same high quality problem. For daily charts, what I'm leaning toward is closing half when I get a candle that opens and closes entirely outside 3.0 ATR Keltner Channels.

Luckily, this was something I was thinking about on the weekend as I'm building my swing trading plan. Monday, I got in TLRY on a day trade and decided to let it run since I'm trying to move more into swing trading. The next day it gapped up and I sold half near mid day when it started to come back down. The day after that it opened and closed much higher and I didn't have any plan for what to do with the other half. I went the greedy route and moved my stop up under that giant wick. The next morning it gapped way down and I was stopped out within minutes after the open, 17 points below the previous day's close.

What I'm leaning toward is selling half of the current position on each candle that opens and closes outside 3.0 ATR Keltner Channels and moving my stop under that candle. That way I lock in profits along the way without missing half the move if it keeps running. So, if I had 100 shares, first I would sell 50, then next candle 25, etc. This is just theory at this point. I'm not sure how well it will work out. I only added the Keltner Channels on my charts this week. Maybe 3.0 isn't a good level across many stocks, though it seems to be as I've been keeping an eye on it while looking at charts this week. And even if it is a good level on daily it may not be good on other timeframes.

If you applied this to PACB on the daily chart, the most recent candle is where you would sell the first half and then move up your stop.

 

[floydddd]

interesting. i'll check it out, asap, esp since PACB is down a bit today ....