In current market conditions, I've been using tight stops on all my trades and getting aggressive by moving them in the direction of the trade. One example would be in today's trade in Macrovision (NASDAQ:MVSN). Yesterday and again today I talked about the technicals in the stock from both a point and figure perspective and from the 60-minute bar chart. While I could have put a stop just under upward trend at $42, I was not willing to risk a decline for a bullish position to that level if entered at $46 (like I did on PremierMarkets.com's hot list).
Macrovision Chart - 60-minute interval
Shares of MVSN looked poised for a move higher on the break above today's downward trend at $46. I wasn't willing to risk a pullback to the $43.50 or upward trend, but was willing to trade the stock long with my stop right near the 50-period MA at $44.50. Even then, I only wanted to trade 1/2 position. If a trader usually risks $10,000 in a bullish trade, then he/she can further reduce their capital exposure to $5,000 and set a tight stop. I was comfortable with this type of risk, especially if the past was recreated. If traders were too look at a point/figure chart of MVSN on www.stockcharts.com they'll see today's rally came one box short of a recent high on that chart. Right now it looks like the stock is trying to range trade between $41 and $48. Give this one some time to develop, but until the stock gives a "sell signal" on its point/figure chart, I'd remain bullish longer-term. However, I can learn from this and understand that perhaps the MARKET just isn't ready to buy the second (2nd) breakout just yet after a stock has made a powerful move higher. Try to use this observation in other stocks you're thinking about going long.