Trader J's Inner Circle Message Board

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Strategies & Market Trends : Trader J's Inner Circle

NVDA 175.02

-3.3%

Dec 12 9:30 AM EST

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To: Wes Stevens who wrote (9498)	2/20/1999 2:36:00 PM
From: Trader J	Read Replies (2) of 56535

Wes: ASCT - Trading these very low float issues that are normally very thinly traded can be quite hazardous to your trading capital. What I usually do is ladder my sell limits fulling realizing that I will be giving up 1/8 to a 1/4 of the price. I usually chop up my trades into 500 and 1000 share lots and then ladder my limit down. It really depends on the volume and the negative factors weighing on the issue. It all comes down to risk/reward. I always try to keep the fear factor involved. This is what caused me to lighten up my load of ASCT in the 6s. I knew it would limit my gains but more importantly, I knew it would limit my losses as well. In trading it is extremely important to live to trade another day, there is always another opportunity. But if you take a large loss, the road back from where you came could be a very long one....especially if you are down 75%. You need money to make money. I think this is why it is so very important to limit the size of your lots relative to your risk tolerances. I limit, for all but the extreme case, my lots to 3000 shares or less. This gives me the ability to cut my losses quickly normally at 1/2 point to 1 point but still provides for nice appreciation on the upside if the stock makes a run. But each person's risk tolerances are different. I can accept a 9K loss on a very bad trade, where someone else may be wiped out by such a loss. It is a dangerous game and trading the low float stocks really ups the stakes. I think an important lesson is to exit the position when things have changed your view...regardless of whether or not you get the price you "want". I have seen many not exit the position because it dropped another 1/8 or 1/4..... only to then sell for a point loss beyond that. Cut and move. Hope this helps. Tj

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