Ford, Just my views :
How low is low? : To an investor, for a junk company, there is no low. So even when the stock goes to a penny, its best an avoid. As against this, for a company with good fundamentals, its is always a buy when the stock is valued basis P/E, sales and profit growth etc.
If the same question is asked of a trader, he will answer after a check of the charts. Low levels are for shorting, retracements are for shorting. Unless the stocks makes a base, it is always a short candidate.
Similarly, charts will answer the question for a good buy. When a stock has consolidated and starts making a upmove it is a buy.
A trader sells low, to buy lower. He buys highs to sell higher. These decisions are made on technical understanding of the charts, (Moving averages, Pivot levels, Support & resistance, Candlestick patterns, indicators and oscillators etc and other patters including Head and Shoulders, Double top, Double bottom, triangles, wedges)
While trading on the basis of daily charts, generally a SL has to be determined as per the traders psychology, risk appetite, market conditions, and system. So there may not be a fixed level of SL. A positional trader may have 2-5-7-10% SL. Another may have a fixed amount of SL say 1-2-4 thousand. Some may have a fixed % of SL, say 1-1.5-2% others will follow trailing SL. All these differ from person to person.
As far as taking profit is concerned, generally a trader will have a feel as to level of profit to take. A spike of say 5-10K while the stock is against the market trend is always good to book. Also, if the stock is priced greatly away from its long term MA, it is good to book profit or trail with a close SL.
Again to answer what a trader should do if a profitable trade is going against him, the question will have many different answers depending upon whom you ask. The conventional wisdom is that it is best to not have a profitable trade turn to a loss. Hence when the profit amount is good, the profit has to be protected with SL or trailing SL. If out of the trade, you have atleast made the money. Also, if the charts suggest, one can go back and re-enter the trade.
All this comes thru experience and individual psychology and system of the trader.
My two bits worth.
hi friends
here are two big trading questions.
post your answer here,but dont imitate or copy others views give your own view as you see it
ASK THIS QUESTION AND ANYBODY WHO CALLS HIMSELF A TRADER WILL RUN AWAY WITHOUT ANSWERING.
Buy low Sell high-
IS WHAT they all say almost always
How low is Low to Buy?
How High is High to Sell?
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Question 2
how much risk is ok and how much is not ok?
for daily chart basEd traders.
COROLLARY
WHAT IF THE STOCK YOU ENTERED ROSE SOMETIME AND THEN STARTED FALLING? WHAT TO DO IN SUCH A CASE?