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Understanding How I Book Gains In A Trade Like PCYC

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June 21, 2012 – Comments (0) | RELATED TICKERS: PCYC

Pharmacyclic (PCYC) has been a great stock for me the past week. When I bought this stock back on the 14th I didn't have some special insight that said "this stock is going to go up over 15%... I didn't. Instead there was an opportunity there, and despite wanting to book gains and close it out at various points when it was up 5% 8% and 10%, I instead chose to just tighten my stop. 

When I first got in I saw a nice continuation triangle/tight consolidation so once it broke out at $40.66 I took a long position with a stop loss at $38.86. Fortunately that stop never hit, and the stock has since rose day after day, accompanied by strong volume as well. 

Here's the chart on PCYC was traded

When I am shorting a stock, the opportunities to make extended gains are far and few between. In fact, I really don't look for them. If I can collect 4-5% off of a short trade, I'm in hog-heaven. Shorting is much more difficult, yes the gains can come quicker, but it is much more difficult to just trail a short with a stop. Instead, it is my belief that you should always cover on notable weakness in a short position.

But with Long positions, it is much wiser to not sell on strength but to ride that stop-loss as high as the stock is willing to go. 

So the point I'm trying to make with this post, is that when you are swing-trading, try to take as much out of the stock as it is willing to give you. Once PCYC crosses into $48-land, I'll tighten the stop up to $47.17. If I don't get stopped out, I'll hold it for another day and see where it takes me.

(Don't worry later today, I'll  have two stocks that I got stopped out of today and what went on with them). 

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