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Strategies & Market Trends : Charts With An Attitude; Trading In & Out
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To: Linda Kaplan who wrote (3676)11/13/1997 9:18:00 AM
From: Esteban  Read Replies (1) of 4701
 
Linda, >>If my stocks don't bounce into profit territory, do you think I should increase cash taking losses? Ordinarily I would just try to ride it out.<<

Hope you don't mind if I jump in here, but I've been giving this a lot of thought lately. I'd make my decision to sell an existing position completely independently of whether you are at a profit or loss on the position. If you want to buy that stock now at it's current price, it's probably a good hold, unless serious technical violations have occurred. As for the general market, if it falls substantially more, so will some of the 56 holdings. That's one thing we've learned over the last month. Your good or bad experiences with AIM might help you decide if you want to go to cash or not.

This correction is good for many of us in that it forces us to think about the downside and in the future, maybe we'll enter a POW on more solid ground, having planned in advance what we will do in the event the stock actually goes down. Here's one idea: Doug gives us short term targets. Calculate the % gain if the target is reached, then divide that by 2, subtract that from the entry price to find a stop loss point. At the same time look for technical support in the area of your arbitrary support level and adjust accordingly. This seems like a nice risk/reward scenario.

Just food for thought. These are issues we all have to ultimately decide for ourselves. But we all need to have a plan, BEFORE we take the position.

Happy thinking,
Esteban
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