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Last week many leading names, especially from the software sector, corrected. The most of them resumed their uptrend within a few days and had a strong weekly close. It's not important why the pullback happened. It's only important how to react and handle such a situation.

If a stocks is extended and >50-70% above their EMA 200, the stock is getting extended for me. I don't take profits automatically, but I maybe take some partial profits and reduce the position size. In addition I watch the position more closely and wait for signs of an upcoming correction. That could be a reversal bar or multiple days of stalling price action.

Before the pullback started, you saw that type of action in a lot of leading stocks. That was a sign for me to take profits and scale back. As I always say: Your watchlist and portfolio are the best indicators!

This type of trading around a core position is an important element for me. It helps me to reduce my draw downs. If you are heavily on margin (150-200%) and you allow the stocks to correct 20%, you will lose all your profits within a few days. That's pure stress and emotions take over the control. So you have to make sure you reduce your position size a little bit when the "party is too hot to leave".

Don't be afraid of that, because if the pullback coverts into a real correction, you protected your capital.

I changed some names in my watchlist after many names pulled back. I sorted out the weak ones and added some new, strong names.

This week I have 49 stocks on my watchlist, 3 more as last week.

I you read my newsletter, watch my videos and follow me on social media, you can get the impression that I am a cool, calm and hardened trader. That's of course not true!

A week where almost all my stocks had a strong pullback is also very emotional for me. Although I took some profits, be very quick with selling and decreasing my exposure, I made mistakes too. I sold some positions too aggressively, bought back with some chasing and bought/sold some new positions break-even. The important thing is: All this more or less emotional behavior has almost no damage to my trading capital. I recognize mistakes very quickly and correct them immediately. If I buy a stock and it reversed quickly, I sell it break-even or with a very small loss.

But the up and downs in my portfolio have some emotional impact on me too. If the market is more volatile, I tend to monitor my stocks and the market more closely. I also increase my research. If I notice this behavior with me, I do two things: Increase cash and look for another activity. I sell some stocks and go out into the garden.

Over the years I made a lot of mistakes and gained experience how to handle such a situation. The most important things for me: Correct mistakes immediately, increase cash to reduce volatility and do other things. That helps a lot.

The great thing as a small trader: You can buy back any size of a position within a minute! If you get stopped out or sold too early, buy back a small position. Set a close stop loss and then watch if the stock can resume its trend.

Finally: I also recommend to decrease your social media activity if you are in an emotional situation. You are not the only one who is in a high emotional state. So many traders on Twitter are really getting active in such a situation. Ignore them all! Instead you must concentrate on yourself and your trading. If you get impacted by the chatter of others, your emotions are getting really out of control.