Hi David: Answers to your additional questions follow:
1. I never use market orders. The only time I recall using the market was when I just happened to be on top of some breaking bad news about a bio-tech stock I owned. Called my broker and it was diving so quick a limit order was no good. He could not even catch the market it was crashing so bad. I was on the phone and watched my savings go to pot. I told that story on here several weeks ago. Anyway, I don't like market orders, especially on options. Consequently, on exiting a position, you are correct, I use limit orders and unless I am anxious to get out, I will go a bit above the ask. Or, if the bid/ask is acceptable, then I'll go about 1/8 to 1/25 below the ask. If it is a large spread, maybe 50 cents below the ask. Usually, the bid will adjust and then I can get a better handle on if it will hit by judging if someone comes back with a little better bid to try to pull me down even more.... then it is cat and mouse until it hits.
2. No, I do not use a computer program. I am good with math. I simply do my own calculations and statistical analysis.
3. Books.... I don't have any to recommend. I have seen a list posted somewhere, though, and if I find it, I'll PM ya. I'll have to dig a bit.
But, I will say this. I have not stopped reading and learning. Back when I first started investing, I read everything I could get my hands on. I still read a lot, more than most folks I'd suspect, but it is on internet primarily.
4. I learned from experience. I read a book years ago by Charles Schwab. In it, he kept saying that you had to experience it, that you had to suffer through some bad plays, a bear market, etc. to really get a handle on things. That, I found, was so true. You have to hurt a bit to gain the experience and learn. What has made me confident was determination and hard work. I did not give up even though I found myself getting knocked to the ground an awful lot. I tell friends that I've tried to help with options that they may as well consider the first 3 years or so as simply going to school and figure on losing more than gaining, in other words, consider it tuition.
Also, I cut my teeth on commodities first... beans, sugar, gold, currencies, you name it, I've traded it. There was one very valuable lesson that I learned from that, and that was to get out quickly if a position turns against you. Same with options, USUALLY, if an option position turns against you, get out.
Hope this helps, David.
Rick |
