Let's say you want to enter a position in a stock at price X, I always ask myself this very important question
- If this stock drops another 30% from X, am I still willing to buy more?
- What are the 3 important factors that must hold true for me to buy more at 30% drawdown
If I have a clear answer to these 2 questions, this stock is a long term hold for me, and I will combine elliot wave and options to hedge different waves, but not selling the stock
If any of the answer to above questions is unclear, it is a short term trade for me and I will look to book profit and not to be greedy