JB,
I understand your skepticism based on your IFMX example. Recently I got stopped out of several stocks just this way (eccs, inpr). So I haven't been in for the run up. Know how much I lost? $100 plus commissions. If you look at inpr, you'll see why I bought at 13 and why I sold at 12.5. With eccs, I bought at 15.5 and sold at 15. Disappointing? Yes. But consider these trades: panl, I bought at 16 and got stopped out at 15.5. It then fell to 11. Topp, I bought at 10 and stopped out at 9.5. It continues to go down. Then look at my trade on cpq. I bought at 19 and set a stop for 18 (guess I was sleeping when it hit 18.5). I'm still in since P&F has given me no reason to get out.
As you can see, I like to bottom fish. I miss more than I hit (I hope to choose better as I understand P&F better). But, when I miss I lose very small amounts. When I hit, well, sometimes I don't really know what to do, it being so foreign to me and all. But P&F makes it obvious when I should abandon a trade to avoid potentially large losses. My best save happened when I bought wmi at 36 (very undisciplined, I must say), and set my stop at 31. Look at what happened next. Straight line down to 14. Yeah, I'm a lousy trader. But I'm not broke. Without P&F, I surely would have ridden wmi saying, "It can't go much lower, can it?" all the way down.
Also, regarding the stops on the stocks that reversed to the upside, I didn't play them properly. I fell victim to what's called a shakeout. The more experienced Piffers would not have sold as early as I did. I should have waited for it to violate its support line, or for its momentum to turn negative. I've got a lot to learn but I never worry about blowing a big wad of cash because my risk is always defined before I buy. That lack of anxiety is most appreciated at home, and will, I hope, lead to a more steady stream of successes.
Regards,
Paul |
