Friday, July 20, 2012

Supergroup - limiting your open risk

UK stock Supergroup gave back some of its profits today, after a torrid rise over the preceding few sessions (chart shown below). Some would say that you should have closed your profits, and they may be right in this particular case. However, experience has taught me that you shouldn't necessarily close your position simply as a result of a strong rise like this. Why?

Well, remember I am trend follower, and therefore I never restrict myself to an overall price target - I only ever exit when the trend ends. HOWEVER, as readers of my e-book will know, I advocate and use a partial exit rule that should be utilised only in examples such as these. This is so that your open risk is kept at acceptable levels.

I've sent out an email tonight to those who have undertaken 1-2-1 training or are part of the mentoring programme highlighting this point, and also showing at what level this special rule should have been used.

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