- Joined
- 16 February 2008
- Posts
- 2,906
- Reactions
- 2
I'm pretty new to this and I can understand were your coming from MRC & Co
it is wise to both to have a stop loss and a target price. however In my personal opinion which is just that. Is it not wise to always re-valuate your position so for me to say that my target price is $20 in 2 years is in my eyes a good idea. However if the market a beautiful creature it is has a much high valuation of FMG which it has always had, been following this for arround 18 months now. would it not be wise for me to re-evaluate my price if this price is reached much earlier then expected or if new more detailed information is released which enables me to better evaluate my exit point.
Iron ore prices drops maybe i will re evaluate my exit value to be much lower.
fixing a price is in my eyes much better for speculative stocks were today up 100% tommorrow down 60% fix a price and get out with what you were expecting, as the change in prices are volitile and you don't get enough time to evaluate the fundamentals.
I however have 2 years to judge my fundamentals for FMG and know what I'm expecting based on the current market info, if this info changes then my evaluation will change.
Yes, this is the point, your target is always going to be dynamic. If profit upgrades ensue, of course, you will revise it upwards, vice-versa for downgrades.
Also, if it reaches your 'fair value', I agree, it is not neccisary to sell, sometimes the biggest gains come in this period, when the market jumps on board and the stock goes parabolic! But like I say, this is where it is important to trail your stop IMO.
How large you trail it, is upto the individual. Like MichaelD says, his is still far from the current price, and a very good point with a large ATR due to volatility. What ATR are you using to trail the stop BTW?
On that note, though I was not in this trade, I would have had the stop much tigher, as my personal preference for this market environment is high frequency, short time-frame trades. I also try to enter the trade when volatility is low, but give it enough room to move. More discretionary and dependent on patterns and volume, as opposed to ATR (though I am going to trial this out down the track).
Cheers