Bought 200 shares of Almost Family, Inc. [[AFAM]] , @$50.71 (15:57 ET), with a stop at $45.90. This stock has been screening well, as it was in the Top Ten stocks as of Friday’s PPT ranking. It is on a PnF buy signal and held up at the close. The other stock I’m watching is Emergent BioSolutions Inc. [[EBS]] , but I need it to pullback some more so the reward to risk is better than 2:1.
The price objective is $67.00 on AFAM. The reward-to-risk is better than 3:1.
The long rules are simple:
1.) The stock must be in an uptrend and trading above bullish support.
2.) Wait for a PnF buy signal to initiate a trade. Look for the stock to pullback off it’s recent highs before placing the trade.
3.) Risk no more than 1% on each trade = $1,000 max. The potential reward (@ the price objective) should be at least $2 for every $1 at risk, at a minimum.
4.) Use a percent-of-risk position sizing methodology. In the case of AFAM, my initial stop loss is at $45.90 (a break below $46 support is a double bottom breakdown). So, risking $1,000 or about $4.80/sh, gives me a position size of 200 shares (rounded).
5.) Exit strategy: sell 1/2 of the shares when the position is up by the amount that I’ve been willing to risk ($1,000). Then move the stop up to breakeven on the other remaining shares. Use a 15% trailing stop or breakeven, whichever is greater, and hopefully, let the dog run.
Disclaimer: Investing in the financial markets can involve considerable risk. Past performance is not necessarily an indication of future performance. This information is prepared for educational purposes only and is not a solicitation, or an offer to buy or sell any security or use any particular system. Use proper due diligence and judgement when buying or selling stocks.
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