August 24, 2010 - Harvest Partial Profits in short position TXI
As I have discussed before, I am a proponent of "profit harvesting," in which you take partial trading profits in a position once it moves strongly in your direction. In general, for swing trades, I would look to bank some profits (e.g., 1/3 position) once a stock position has provided a 10% gain, and then again (e.g., another 1/3 position) when the balance of the position has reached a 20% gain.
Today, the market is taking another leg down, as I predicted in yesterday morning's Week Ahead message. So, we have an opportunity to book some profits in another short position, TXI.
I am going to close 1/3 of the original position at $28.20, which gives us a 12% gain from the entry price of $32.04. I'll let the balance of the short position ride in anticipation of even lower prices.