Momentum Daytrading - Tricks of the Trade Message Board

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Strategies & Market Trends : Momentum Daytrading - Tricks of the Trade

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To: Ken Wolff who wrote (1904)	4/16/1999 6:07:00 PM
From: Ken Wolff	Read Replies (2) of 2120

cont... Confusing fundamental value with real value is another way for a daytrader to justify blown stops. One moment of hesitation while trying to guess what his trade will be trading at in a few days, weeks or month is another reason NOT to sell. That moment of indecision will cause a stop blowers nightmare. It goes something like this: 1. You just bought XYZ at 20 bucks with a stop loss set at 19 3/4. The real value is being stated as 50 bucks in 6 months. They just got a wonderful contract and everything looks rosey... 2. The stock does indeed climb to 20 1/4 and looks set to go to 50... just like the analyst said it would. 3. You are now computing the score as you translate your 1K shares times 30 bucks and figure a clean 30 grand on this one.. 4. The stock falls down to 20 and gets selling pressure. The pace picks up... gets faster and is getting sold. 5. The stock sells at 19 3/4 and you are still thinking of the value at 50. "Heck it is worth 50.. so even if it hits 19 1/2 this stock has good fundamentals and...." 6. Meanwhile as you thought about the trade it is now trading at 19 1/2 and you are down 500 bucks. You are now thinking that it has to bottom soon...all based on the real value of the stock...50!!! Now you are beginning to sweat. 7. You are now seeing the stock trading at 19 under heavy pressure and now are experiencing real pain... down $1K and you can't sell now... you REFUSE TO TAKE A $1K LOSS!!!! 8. The rest of the trade is now a familiar story as the stock heads to 18, 17, 15 or 10 ..... Daytraders should only care about the predictable increases for a very short period of time and when he's wrong he should get out taking a small loss. Ken www.mtrader.com

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