From: Olga Bourlin (fauxever@sprynet.com)
Date: Sun Jun 15 2003 - 14:27:31 MDT
From: "Spike" <spike66@attbi.com>
> Dossy wrote:
>
> > I'm not interested in proving anything. The strategy of "buy a
> > sweetheart, hold it until it goes up 10% and sell it" seems to work
> > pretty well.
>
> The problem is recognizing a sweetheart. If one in
> ten of these sweethearts go all Enron on you, then
> the 10% profit you made on the others average out
> to nada.
If a sweetheart starts to abuse you, put a stop to it (I mean literally, use
the "stop" function - predetermine how much you are willing to risk downside
ahead of time). Remember, you are not married to the ball-and-chain. You
didn't vow to love the stock through richer or poorer or through sickness as
long as ye both shall live. Why would anyone sit around and wait for a
stock to go to $0.00?
Last Friday (having bought a 300 shares of CREE the night before) I noticed
that CREE started to tank, so I quickly looked at the news - which was that
a brother of one of the founders was suing the company for billions of
dollars. I had a stop in place for CREE, so I didn't lose much and didn't
have a boatload of shares to begin with). CREE actually opened .70 higher
Friday morning than the night before. But I didn't sit around watching CREE
continuing to tank over $6 to the downside before it bounced up over $2 by
the market close (ending up just under -$4 for the day). Some traders even
see that "dead cat bounce" as a good play - when a stock hits the low of the
day and starts to gain ground again (it is not difficult to gauge the sell
orders turning into buy orders on Island and on Level II). I didn't bother
any more with CREE - it was not a profitable trade for me, but a very small
loss. Use those stops, people.
> Add this to the fact
> that the day traders are not working a 9 to 5, and
> you find few winners.
I agree there are few winners, compared to people who start the process, and
end up giving up (because they inevitably will suffer some losses while they
learn). But something happens to traders who are able to learn from their
mistakes and persevere - they start to "get it." They "get" what they need
to do, what they need to watch out for (and what to watch *for*). I am not
saying it's easy - I'm just saying it's possible to turn into a good trader.
Consistently.
Again, remember that traders also make money when the market is down. We've
hardly discussed shorting stocks (which helps liquidity in the stock
market), but that's another thing that most average investors don't do -
short stocks. Average investors depend on the market to make gains. But
traders who watch the market (or a particular stock or stocks) carefully,
have a good chance of profiting from any condition the market throws at
them. Shorting stocks is not without its own pitfalls, but - again - stops
can be put into place to the upside. Use those stops, people.
Olga
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