MZZ Builds Support and Taking Stops

MZZ, the UltraShort MidCap400 ProShares ETF was entered long again on Friday, as a buy signal was triggered on the daily chart. The candlestick pattern also shows an outside day which can be bullish. A stop will be placed one penny under Friday’s low of 70. MZZ was entered intraday using a 5-minute chart, but with a decent sized stop. This left R at 1.5. The all-time low of 69.65 was chosen for the stop. The entry was filled at 70.96 using a Bull Long 3 pattern. Note the change in trend as a higher low and higher high were put in. The signal on the daily chart came later in the day. I chose to enter early, because the 5-minute looked bullish.

MZZ will be traded using day low stops and evaluated every day to determine if the stop-loss method should be tightened or not. It will never be loosened.

Shares in BOOM were stopped out early under yestarday’s low for a small gain. This stock just couldn’t get going from the entry. Note if the stop-loss hadn’t been taken where the position would be. Always take your stops.

It brings up an interesting question though. Should a stock trade be closed based on intuition, rather than holding on for the stop. LNCR gapped down hard on it’s daily chart. An entry is shown on the 5-minute chart below. It basically did nothing all day. I contemplated on taking a dime loss because my gut said to exit the trade. I held and the stop hit though. In this case the gap was excessive and the stock bounced. I did notice on the 15-minute chart that their was a failed breakdown. Possibly I could have incorporated that factor into the trade.

Trading is an art, and sometimes our intuition is correct. If you start pulling stops constantly though, you may end up cutting profits short on trades that run when your gut says to sell, yet the stock keeps running.

Do you always follow your stops, or listen to intuition occasionally?