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Strategies & Market Trends : MDA - Market Direction Analysis

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Jan 16 4:00 PM EST

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To: Haim R. Branisteanu who wrote (43553)	3/18/2000 2:44:00 PM
From: HairBall	Read Replies (1) of 99985

Haim: I made a decision years ago to specialize in just one area...going long equities. For quite some time, I would not even go short. Now I do go short (only in my speculation portfolio), but long positions far outnumber the short positions... In the investment arena, I say to each his on...what ever works best for the individual. To All: Often I think "some" folks with not a lot of capital get started in options trying to strike it rich to quickly. They would have been better served to slowly build up that capital by learning how to make winning trades. In fact no matter how much capital one has initially, I recommend that trader/investor "newbies" limit the size of their trades by starting with a small sum of money and limit all trades to a small number of shares. (100-300) As the portfolio grows, they will have accomplished three things: 1) Learned how to pick and execute winning trades, 2) Managed trades at that dollar amount level and 3) Gained valuable experience. Obviously in this market one can get lucky and make a lot of money by accident. So I also recommend no matter how fast one grows their portfolio, one gradually increases the size of each trade. That allows one to learn how to trade with larger and larger share counts. One can not always get in and out of a trade as quickly with larger share counts. Frankly, I limit all my trades to a maximum amount of shares. This keeps my trades manageable. Sure sometimes I think shoulda coulda woulda, but then there are times when a trade goes against me I am glad I did not bet the farm. I guess my style of speculative trading is like the Turtle in the race with the Hare...slowly but surely! I limit the total amount of shares in any one trade. (Usually I trade between 1000-5000 shares.) This is far more important than the dollar amount. I also limit the amount of shares based on the liquidity of the issue. I also limit the number of positions at any given time. One should be able to focus on each position. Many folks have PMailed me that were fortunate enough to hit a killer winner or three as they began to trade/invest. They started thinking that they knew what they were doing. They kept playing for larger and larger stakes. Eventually they ended up loosing it all and in some cases much if not all of the original grub stake as well. Learn to pace just like a marathoner. Worry first about being able to finish the race, then worry about being able to place! Regards, LG

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