The lower the buy entry within a base, the more patient you can be.\u00a0 The higher the entry, the less patient you\u00a0can afford to be.\u00a0\u00a0<\/em><\/p>\nIf you\u00a0cannot set a\u00a0stop price below a significant low\u00a0because it is 10-15% lower than\u00a0the current price, then it is better to use a tight stop of 3-5% instead.<\/p>\n
If our entry into $GDDY would have been closer to $33, we could have stayed with\u00a0the full position\u00a0as it chopped around the breakout point at $34.<\/p>\n
However, since we\u00a0initiated our position around $34 and added to the position at $35, the lack of follow-through forced us to exit (the additional shares) with a small loss.<\/p>\n
Remember that volume should also confirm breakouts, especially when buying stocks at Entry 3 or Entry 4.<\/p>\n
Finally, the overall health of the market should also be considered when setting stops.<\/p>\n
If the market is in moonshot rally mode, buying a\u00a0stock at a higher entry point\u00a0within the base\u00a0will often work.<\/p>\n
But when\u00a0conditions are choppy, it is often better to be more creative by entering near the low of a base, setting your\u00a0stop below the base.<\/p>\n
“Set it and forget it” is an excellent approach to stop placement we use in our swing trading service<\/a> when buying at Entry 1 or 2.<\/p>\nWhat did you think of this article? Want more of the same? Please share your comments below.<\/em><\/p>\n
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