- Time stop depends upon the kind of time frame I have decided at the time of entry. If my entry is based on weekly time frame, I would give the stock a time of few weeks atleast to move. Because many a times, after a successful breakout, there are a lot of tests and re tests of breakout levels and these things take time. And after such to and fro moves, stocks finally give the expected moves. To give a recent example, KRBL had a very good 3 year high breakout above 340. It then crossed 400 and went into sideways consolidation between 375-415 for six weeks and finally went above that range to hit swing high of 435. Post that it has again started a short term correction and closed at 405 which is within earlier trading range. So going ahead, I can either book profits/partial profits, or tighten my stop loss to levels of around 370, slightly below the earlier trading range. Time wise, it might not be too easy to put a stop as this breakout was a 3 year high and I have to give it atleast a few months to reach target.
The one instance where I exit my position is when inspite of enough time having elapsed, the stock fails to move and I have other better clear cut opportunity.
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I do not have any fixed number of trading positions, or any rules related to it. Broadly I try to restrict my trading positions (all techno funda, very few pure technical) to 50% of my overall portfolio.
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Regarding breakouts, your observation is spot on. We are often flooded with breakout ideas, and its often difficult to filter out the best options. I usually look at the kind of consolidation before the breakout, and if there is prolonged sideways movement with volatility contraction, I prefer those breakouts. I also prefer stocks that are in sectoral fancy as its easy to make money in stocks that are in sector in fancy.
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I average up in stocks that have moved up only if the fundamental story/results/newsflow inspires confidence. In rest of the picks I tend to stay put with starting allocations. But my problem is that many a times, at the initial entry phase, I am heavily invested and hence allocation wise its difficult for me to add more.
Exit strategies in my stocks is something that is work in progress for me. Its difficult to nail down a specific strategy, that works all the time. So still working on that aspect of investing.
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