Stocks continued their bid this week and breakouts are happening left and right. Sentiment is growing increasingly bullish as traders and investors see their portfolios hit new all-time highs with the market.
I still think this bull market has legs, but with the election less than three weeks away now, I’m urging you to not get greedy and stay true to our risk management principles.
In the meantime, I wanted to update you on what I’ve been up to in this market. Take a look…
Capturing Profits Is Managing Risk
If you’ve been following my trade strategy for any period of time, you’ve probably noticed that a big part of my process is capturing initial profits when upside price targets are reached. This is the case in over 80% of my trades.
Have a look at some recent examples in names like PI, VST, and SATS:
Why do I do this? The answer is simple. When you’re right on a trade, the position grows as a percentage of your portfolio. This exposes you to something called concentration risk.
Aside from my periodic Back Up the Truck positions, most trades I take use 5% to 10% of the cash in my portfolio. I seldom risk more than 1% of my account value per trade.
This is just a surface-level review of risk-management strategies, but it’s something I discuss frequently and deploy with A.I. Timing Webs. Speaking of which, my last trade I sent out on Tuesday was TDS, and it’s exploding higher today…
And if you haven’t seen already, I’m closely monitoring the emerging Trinity Trade. I don’t think this is something you’ll want to miss either.
I’ll be back at you Monday with the updated Tale of the Tape letter. Have a great weekend!
Gianni Di Poce
THEOTrade
