About Gorilla Trades, Inc.
– Stage one: “Trigger Day.” The stock idea has traded above the previous day’s high price within a five-day period (please refer to the Gorilla Dictionary for detailed term explanations). This stage is designed to alert subscribers of this stock’s strength, and should be watched and considered for purchase.
– Stage two: “Confirmation Day.” The stock idea has experienced accumulation beyond its average daily volume levels. Waiting for this event significantly improves the probability of a successful trade.
– Stage three: First target. This stage is designed for the trader to realize a portion of the stock’s profits. Although stocks can theoretically rise forever, the Gorilla uses this tool to properly diversify a portfolio (the remainder of the capital is used to invest in new or existing GorillaPicks).
Furthermore, knowing and understanding the current market environment (reference the Banana Barometer for a market overview), evaluating the current portfolio of GorillaPicks, taking notice of risk ratings, and updating your stop levels on a weekly basis can significantly increase your portfolio’s return.
Diversification- Stocks are diversified by selling a portion (currently 75%) of each GorillaPick at its first target. The realized capital is used to purchase more GorillaPicks, while the remaining 25% is left alone to rise to the stars!
Exit Strategies- Stop loss levels and raised stop losses are used to protect capital during a GorillaPick’s holding period.
Confirmation Day- This concept was developed to insure a higher probability of success in each trade. Entering after a stock has “confirmed” drastically reduces trade risk.
Shorts- Carrying a hedge during a market’s decline may keep a portfolio protected. But during the digestion of a new bull trend, shorting stocks has proven to be a disaster.
Risk Ratings- This figure denotes a stocks risk (1 being the lowest-5 being the highest). The figure is derived from a multitude of factors that include beta, price action, volume, liquidity, market capitalization, stop out risk, and potential profits goals.
However, the figure that is most relevant to a trade is the amount of risk taken versus the potential return. While subscribers’ entry points may differ, along with their own risk tolerance, a two-to-one reward-to-risk ratio should be the goal. While the Gorilla is screening the market for the next explosive, high probability trade, concentrate on specific tools (Confirmation Day) that may assist in each trade’s success.
Stop Loss Levels
Note: the “current portfolio” in Excel spreadsheet format is completely operable to accommodate any adjustments to individual figures for determining potential points of entry or exit. The areas within the current portfolio DO NOT always maintain the same percentage below the market price of each GorillaPick, and may be set at levels to accommodate each GorillaPick’s respective “Risk Rating” or to realize gains prematurely in uncertain market environments. Furthermore, before using the trailing stop technique as an “exit strategy,” contact your account custodian for further explanations or questions.
However, an “exit strategy” is any method used to defend risk according to your personal risk parameters. This strategy should reflect your expected return, which compensates you for bearing this risk. When determining potential areas of exit by setting “stop orders” or notification by “alerts,” the key is to be decisive, while keeping your risk and losses to a minimum. The Gorilla updates appropriate (recommended) stop levels and/or upside targets in the Trader’s Notes section in each Monday evening email. These levels should be viewed as guidelines, and are designed to alert subscribers to the area that may pose risk to each GorillaPick’s strong continuation pattern. The price levels provided are suggestions to protect capital and unrealized gains, but should be adjusted to each subscriber’s individual risk parameters.