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Strategies & Market Trends : The Art of Investing
PICK 45.35+0.2%Nov 7 4:00 PM EST
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sixty2nds
To: sixty2nds who wrote (10467)10/31/2025 1:16:05 PM
From: Sun Tzu1 Recommendation  Read Replies (1) of 10550
 
The difficulty with riding a hot hand, or worse in my case doubling when it doubles, is that eventually your luck runs out and stocks fall a lot faster than they rise.

Stocks are not normally distributed and the up/down moves are skewed.

Here's a recent example. I owned and rode NTLA to the top. Then in one day, it went back from October to July! It destroyed 3 months of work. If one had kept adding to it as it went up over the past 3 months, you didn't just lose your profits, you'd be sitting on a substantial loss.

Most people cannot live with a 50% drop in a day. Fewer can withstand to experience that every week. It changes a person's psyche.

I developed the rail system to fit my specific trading style. NTLA showed weakness at the red rail. It was a sell. But it also showed weakness at the rail on June 30th and it wasn't a sell, it was a buy the dip then.

See if you can spot the difference between the two. HINT: My trendlines are not regular moving averages. They are my own invention. The math is different than anything you've read about.

Even so, I still lose a lot. It's just that I wind more than I lose. The severity of the losses mandates that I maintain a *very* diversified portfolio and I act fast. Most people can't do that. It is not psychologically easy and it is very demanding in time and discipline. Which s why I say, sell first and buy it back later if the picture improves. But this is specific to my style. For many other stocks you can safely buy the dip instead of selling. In fact I do sometimes buy the dip, but not when it is near my rails.

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