RULE #1 QUESTION OF THE WEEK: TIME OF DAY TO TRADE, + USING TRAILING STOPS

As promised, here's a reader-submitted question for the week of April 16th.  This one is a two-parter.

Question:

Hi Phil,

I have not come across this yet on your blog, but I would like to know your thoughts/approach as to when in the trading day you tend to buy a stock. Do you pull the trigger during a specific time period of the trading day (e.g., during market-open frenzy, wait until the last hour of trading “when the smart money” transacts, just before Wall Street’s lunch, after, other), or are you watching the ticker continue to move in the right direction, then buy? Other? And, do you put a sell order in at the same time to auto-bail if the stock drops to a certain level while you’re doing a “Get Motivated” seminar?

Thank you, Don

Answer:

I tend to either buy at the end of the day or, if I can't, I just put in a market order at night and let it execute on the opening.  I do use percentage trailing stops that I put in after I get the first red arrow (or if things start to look dicey about further advances).  I don't mind getting stopped out after a big run up.  I can always just buy back in, no big deal.

Nothing sacred about this stuff.  Just the way things work for me.

Question:

Forgive me if it’s in your book, but would you share your “rule of thumb” for an appropriate % to consider for the trailing stops.

Regards, Don

Answer:

I routinely put in a 10% trailing stop loss that just tracks along with the rise in price.  But I almost never get stopped out because I check the tools every night to see if it's time to bail.  I'm usually out of there well before the price slides even 5% off its high.