Monkey Throw Dart: Cruise Control and Trailing Stops

Thursday, March 26, 2009

Cruise Control and Trailing Stops

I've been on autopilot and am letting the CMI do the driving. The early buy of the QLD has paid off so far with something like an 8% gain so far. Following the CMI signal exactly, the current gain would be 5% or so. I am purposely hold back from placing a stop just to give this upward move a chance without stopping out. My intent is to hold through the weekend and put my faith in a textbook CMI run-up.

The rule of thumb is to place the first stop where I can take half of an 8% gain and then keep a 4-5% runnnnnning stop below the QLD price. Ideally, I would run the stop right up to a 20% gain. "Easier said than done" and "rules were made to be broken" come to mind after stating my stop rule mantra.