The Average Investor's Blog

A software developer view on the markets

Stopping Out of the S&P 500 Trade

Posted by The Average Investor on Aug 25, 2010

From my research I have come up with the idea that a 5% stop loss is reasonable for the S&P 500 trades. Thus, in my imaginary portfolio I am out of the position opened on Aug 2nd for a 5% loss.

Again from my experience, once out of a trade because of a stop loss, one stays out until the next signal. What does that mean? Notice, that we exited the trade before the end of the ending period (end of the month in this case), thus, it might as well be the case that at the end of the month S&P 500 is still in buy mode with respect to its 10 month MA. However, we are not going to re-enter until S&P 500 triggers first a sell, then another buy signal.

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