<OT> Jill, I started out as exclusively a buy and holder. That's how I built up a nice portfolio full of stuff like MSFT and PFE at very low cost. I still hold that, and have been adding to it when they are on sale. However, as I watched my port fluctuate up and down, I decided to see if I can't take a hunk of cash and swing with the waves. One thing led to another, and I ended up a daytrader. Mind you, it wasn't an easy education, and I would not lightly recommend it.
The one advantage daytrading has given me, is that I am not afraid to go short. This is a God-send when the market is selling off, or on a downtrend. As a buy and holder, all you can do is hold and watch it go lower, or go to cash.
Like I said - no congratulations are due me today; when the market has a very clear trend (like the Naz did today), it is relatively easy to make $. I just trade on the short side, cover on dips and short the peaks, confident that the day will end up on a low note. Thus my risk at the end of the day is only short-covering frenzy - don't want to get caught up in that. I wanted to be in cash at the end of the day today, in case of a technical rebound tomorrow.
Re: taking original investment off the table. Very sound strategy but only with *speculative* stocks. Nets are the perfect example. I always try to take profits, so that I end up with pretty much zero risk. Recently I did this with SFE. Some weeks ago, I did TA which indicated that SFE will not hold the 90s, and that the low should be 65, and settle in low-mid 70s. However, I traded it heavily, so that ultimately, my mean cost is at this point at $34. SFE did not hold 90's but while it held 65 for awhile, ultimately it broke it. That gave me a warning sign - at this point I felt SFE was vulnerable, even though SFE moved right back above 65. Friday it held 65 exactly, but to me, once it broke what I thought it should have held, I knew today would not be pretty. The only reason I didn't sell, is because I'm going for their IPO program.
In any case, it's really amazing how strong MSFT is - which is why I have it in my long-term portfolio. This doesn't mean there is no danger, the risk remains, with support at 74, and then at 67 1/2. I hope it never tests them (and I'm betting that come hell or high water, 67 1/2 will hold). CSCO - down almost 3, QCOM (on which I lost money trading Friday) - down 6. Only IBM added muscle on the NYSE.
Bottom line: taking profits on your *speculative* stocks, assures that you will not lose money - the rest is gravy.
Good luck!
Morgan |
