So what you are worried about is an upward trend reversal?
Why would you buy everything in 3.05 then you sell half of it for the same price? It is a waste of trading fees. I suggest you better buy 50% of the total budget and the remaining 50% you can set a stop limit (buy) at the trigger price of 3.075 and the limit order at 3.08.
If the price continues go down, you can cancel your buy order.
No..so I wouldn't buy everything at 3.05, I'm saying that I'm already in a long term long position in the asset and I want to take advantage of some short term downward movements. This is basically an order I'd put in at the start of a swing fade. So lets say I got in at 2.75 a couple months ago, it shot up to 3.05 and it's showing me signs of a low volatility downtrend that's going to go on for a while. Basically I want to take some profit at this point and re-buy when it retests at say 2.90 after a long grinding bleed out, but I don't want to babysit this thing while it makes slow, low volatility moves down after my sell point.
You mentioned selling and then setting limit buys at a lower price, I do this often for a similar kind of fade strategy and it works well, but only shorter term and w/ higher volatility conditions. I typically do this for little overextensions to the upside and I'm expecting to pick up a little bit and it's choppy or for consolidations in an uptrend. Also these are shorter term trades and I can reasonably watch it and make sure it doesn't go the other way on me. BUT there are some circumstances where it's the start of a slow but persistent drift downward where I think it makes more strategic sense to basically but a stop loss style re-buy slightly higher than what I sold it for rather than put in a lower limit buy. Part of the reason for this is that I do have to sleep sometimes and I'd rather have a stop loss style order in to rebuy slightly higher rather than hope that it hits my buy orders overnight. (also, these low volatility conditions usually occur at the times that I'm sleeping and sometimes on weekends) But yeah, I have learned the hard way that just setting lower limit buys can miss or partial fill and pop back up and screw me while I'm sleeping or busy and can't do anything about it.
In a nutshell, these are circumstances where I'm taking the position that if there's any kind of upward trend reversal past my sell point then my theory is busted, this isn't the slow bleed I was looking for and I want back in. Again, this isn't something I would use in all circumstances but I often see really long slow fades in the assets that I trade and when these start, there's rarely much reversal to the upside past the strategic failed breakout sell points I would choose.
