lowtrade

[lowtrade]

Capital Preservation Move

Maybe I should say something about what I did today & why. It was a planned capital preservation move, last night. As a low risk swing trader, I run to the sidelines if something bothers me.

I bank gains and re-enter if things improve. If I lose some gains, because what ever doesn't happen. I don't care. You only really lose when your in and something does happen.

At any rate, the day before yesterday the DOW & market, gaped down on very strong volume. This gave me new second buys in several stocks And yesterdays strong gap fill added to my over all gains.

The damn volume on the gap down day, bothered me! Seemed to much support for a market correction, without follow threw. So basically I questioned yesterdays positive gap fill so quick.

you can see this here;
http://ih.advfn.com/p.php?pid=webchart&btn=s_ok&ihsymbol=&ihpagelist=Quote&symbol=DOWI%3ADJI&s_ok=Get+Chart&period=1&drawmode=2&size=19&volume=1

I plugged in my personal numbers and decided to take gains and re-enter after any correction continuation. Or up move continuation. I expected the large gap down volume was telling me, retail believes in a correction, more then the lower volume gap fill following day.

So there was the hunch, here was the plan. Cash out bank gains, if market crashes re-enter after reinvesting original & gains cash. Increasing future gains, because I bought more shares for less. If the market continues, I'd reinvest with the original cash and hold the gains. Starting new in the same stocks, I still feel will continue up. It's a win win capital preservation move. Either way I win, just a little less if the market continues. And a lot more if it doesn't

See experience has taught me, when the market corrects, it pulls winning stocks down with the weak stocks also! So my low risk mind said eval my standings and plan for the worst.

This post is about this plan for the worst mindset I trade with. Over the years I have probably saved capital 50% as often as I made out right gains.

Food for thought. When choosing your trading style!

Old Ben Franklin's "a penny saved is a penny earned", thing my dad drummed into me early! By 9:45 am, I just earned 3% by selling and will probably earn more in future gains, with the same stocks, just by planning for the worst.