Unfortunately you have to extemporize a bit as well. IF you believe in the stock you own, AND the historical price patterns and chart patterns show you that 5 point loss is akin to a 1/2 point loss in another stock you hold on through the loss.
And the big gains due entail bigger risks, that's true which is why I don't hold large positions in these stocks AFTER they have been up 3-4 consecutive days. The ones I choose are not just momentum plays, I track the companies and their prospects and if I don't know, I ask. We don't have earnings, granted so we adjust for sales, price/sales, revenue, cash flow, future growth etc. If you notice there are 'crappy' nets out there as well we try to stay clear of those. I was in WEBT through the downtrend and I held BYND through thick and thin as well. I held MLTX since IPO'ed but the rewards come from the overnight holds. Not having to 'chase' a gapping hi flyer in the morning because you are already in them.
I held both BCST, NITE and NTBK throught 5 point losses and have not gotten stopped out. My one exception was getting stopped out in CNET after 5 point loss and getting in the next day at 120 after a 14 point gap up. I'm sure my trading strategy was less than proper but I wanted in. The stock went to 200 at that time.
Remember the strategies change for the earnings plays.. Almost the opposite, I run quickly if the trade turns sour. That should be obvious because if an earnings play is not going well before earnings, something is usually up.
IF we all did this right than we'd have gotten the holy grail, and there is no holy grail. We do better and better every time and learn a little more. We have losses, but as long as the wins outweigh the losses by a handsome margin, we know we are doing it better. |
