Quite often it is possible to predict a minimum target figure if a stock is following a predictable pattern but generally you have to expect it to move in the direction you want.
I tend to go with a trailing stop and that is often an obvious visual point on most charts. The main initial target is to be able to get your stop up from your predetermined loss point to a breakeven point without getting too impatient or too close to the action that would cause you to be stopped out only to see the price continue on its way upwards.
Have a look at the chart of RED, not necessarily a great example as it really is a 15 cent stock that has had a consolidation and the erratic volume etc confirms that.
Lets say you went long in the first week of November and you were still holding when it peaked on the 1st of December, just by looking at the chart where is it obvious that the uptrend has most likely ended.
Its really as simple as being the reverse of why you entered at a particular point or breakout.
If you tip the chart upside down, where might you enter if thought that it had bottomed, the same applies when you think it has topped, if that makes sense !
Re Trailing Stop: I agree 100%, Boggo
Talking about small retail investors - as opposed to market makers, movers, shakers - one of my tutors used to say "The Market doesn't care where you bought. The Market doesn't even know you exist." When we really think about it, that makes a stop that's based on our buy price rather haphazard. I let the chart guide me as to where the promised change of trend is failing to eventuate. That's either a must-hold support that's evident in the market depth (provided that's a credible help), or a neutralising suggestion that the uptrend is coming to an end.
To my way of trading, this neutralising signal can come from a Bearish candle formation or simply a Fibonacci target from a previous breakout where trades appear to hit a ceiling. If such a signal happens and the stock in question has a history of "playing" by this particular rule (which some of us refer to as "the stock's DNA") I don't wait around until my lower stop level gets broken. Usually, I find the break comes a few days later anyway, only at a lower price than I managed to get.
As regards "flipping the chart over", I know that suggestion is being made quite often and may well be used as a rough guide.
But it usually gets one out of a trade much too late. The reason lies in the fundamental psychological difference between the decision processes that lead to buying as opposed to selling.
In general,
fear of losing value is a far stronger emotion than
greed that makes us want to get on board cheaply. Our brain may "know" that emotions don't have a place in trading, but the brain is rarely the sole decision centre.
Compare the sections of a chart, where the price and volume move up: steadily, hesitantly, with backing and filling; as opposed to periods, when a sell-off occurs: the first sign of somebody selling a noticeable amount, and it's panic stations! Get out! Get out! The ship is sinking!
Sometimes, this stampede can be artificially introduced when someone has access to an online server that holds many retailers' conditional (stop) orders; or someone merely "guesses" correctly, where those stop orders are sitting. It only takes a few judiciously placed sell orders to trigger an avalanche of stop orders, called a "Stop Raid".
(I have heard brokers brag about their ability to scare it out of their retail clients and build a good parcel 10 or 20% below Market - usually within minutes.)
Which has cured me of any notion about leaving contingent orders with somebody else's computer. When my stop condition gets hit, I always take the time to analyse the situation and check the background. When I detect a stop raid is on, I'm rather inclined to join the low buyers than feed my perfectly good holding to them in the general panic.
PS for boofis: In order to calculate my position size, I must know
before placing the order which stop level currently applies. Without it, I wouldn't be able to know how much of my capital I'm risking.