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Strategies & Market Trends : The Final Frontier - Online Remote Trading
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To: Harry Ehrlich who wrote (1168)11/25/1997 9:22:00 PM
From: NW_Trader  Read Replies (3) of 12617
 
Harry:

Don't mean to butt in on irby's response, but here's my .02.

Yes, you're right - you may miss out on a stock that gaps up. But that's like saying that if you don't buy something right now, today, you'll miss out on any possible gain that occurs in the next hour.

As a trader, you must realize that there will be plenty of opportunities to make profits, you don't have to buy every stock on the market, and _most importantly_ money management (aka preservation of capital) must be paramont in your thinking. This latter principal requires you to cut your losses short and move on if the market turns against you. But when you hold overnight you risk that down draft gap which you can't trade out of until it is too late.

Do the math. A 20 % loss requires a 25% gain to break even. 33%loss requires 50% gain. Your trading capital won't survive too many such hits and IMHO in the current "dissapoint-me-I'll-kill-you" market such hits are too frequent. And swinging for the fences doesn't work very well with frequent trading. But steady base hits will keep you in the game in comfort.

Sorry for the sermon, I'll get down off my soap box now.

Peace and Justice --- Patrick
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