A friend just e-mailed this article to me, so I thought I'd also pass it along: My Best Trailing Stop Techniques. Exits are one of the most important aspects of investing/trading, yet far too many people plan how they're going to get out of a stock. Trailing stops are a great way to manage exits. Here's just a part of the article (emphasis added by me):
Most investors and traders spend far too much time focusing on how to enter a stock, and far too little time focusing on how to best exit a profitable position. What is particularly interesting regarding this neglect is that most traders make the vast majority of their profits in a year from just one to five trades that move substantially in their favor. Thus most traders would actually do better to focus in on how to better exit heavily profitable trades than they would to further refine their entry techniques. I would like to briefly go over some of our best 'trailing stop' techniques to help traders learn how to exit profitable trades much more profitably. We use a number of trailing stop techniques, but the simple rules of thumb we present here should greatly enhance the trading of most investors.
