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Strategies & Market Trends : Trading For A Living

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To: Char who wrote (860)	7/11/1998 1:59:00 PM
From: Rick Slemmer	Read Replies (2) of 1729

David: Welcome to the world of daytrading! It was about 200 when I put in the order and it fell so fast that I got executed at 198 15/16. So much for limiting losses at ¬ point. That is the problem with the advice from traders who tell you to cut your losses. When the stock moves against you sharply, you head for the exits. Unfortunately, everyone else has the same idea and you end up selling/covering when the stampede finally stalls or reverses. I lost more money following the "cut your losses and let your winners run" advice than by any other method. I've since recouped those losses using modified position trading on stocks that show definite trends. Sometimes I hold a stock for a few hours; sometimes a few days, and occasionally a week or two. But unless you can get on the AMZN/YHOO/EGGS crest of the wave, daytrading is stressful and not at all easy to master. It's simply too easy to be shaken out of a good position when your tolerance for a loss is an eighth or a quarter. I follow some very simple rules: Find patterns in the stock that indicate the next immediate short-term move; Eliminate those stocks with spreads over half a point; Buy or short 5,000 to 10,000 shares during market hours based on the intraday activity (always use limit orders); Set a reasonable stop on the downside; Cash out when your profit makes the exercise worthwhile. Only you know when that is. Sure, I've left a lot of money on the table; PIXR springs to mind; I bought in at 46 and sold at 48.75, only to watch it go to 65 a few days later. But I was happy with the gain so I cashed out. Onward to another opportunity. Good luck! RS

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