Entering a trade is only half the battle. You always need an exit strategy.
The preplanned exit is especially important when you short a stock because the short covering rallies can be fast and furious. Here is my plan for CTAS, which I shorted last month. I like to use the ABC pattern as a way to determine a price target. Basically, I take the point difference between the A and B point and then subtract that number from the C point, giving me a target. I learned this method from Tom O’Brien and I’m amazed how well it works.
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