Getting the Biggest Bang for Your Buck in This October Rally

Hey traders,

I’m in the airport about to fly out to Rome for my son’s wedding, but I wanted to get this quick message out to you about a strategy that can help you maximize your returns during this October rally.

I know a lot of you are probably wondering, “What’s the best way to get the biggest bang for my buck with the stocks I already own?

My answer? Consider using a trailing stop.

A trailing stop is a great tool for locking in your gains as stocks move higher. Here’s how it works:

  • Set a trailing stop to a certain percentage below the current market price — I recommend around 7%.
  • If you use a training stop (not a regular stop), as the stock price rises, the stop will automatically adjust upwards, maintaining that set percentage gap.

Example

Let’s say you buy a stock at $100 and set a trailing stop at 7%. That puts your stop price at $93.

Now, if the stock climbs to $107, your stop will move up to (roughly) $100, so even if the stock drops a bit, you’ll lock in your profits.

If the stock keeps going up, your trailing stop will continue to rise along with it, helping you capture more gains while reducing your downside risk.

It’s a straightforward way to protect your capital and profit from rallies — without having to constantly monitor the market.

If you’re not sure how to set a trailing stop, reach out to your broker. Each platform is different and the support folks for your broker should be able to tell you how to properly set a trailing stop.

So, as we head deeper into October, take a moment to set those trailing stops. With the way the market’s moving, it’s a smart way to ride the wave higher and keep your profits safe!

UPDATE: I went into a little more depth about when to use — and NOT use — the trailing stop in this post.

Happy Trading, 

Jack Carter

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