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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: JLS who wrote (14895)	11/13/1999 12:07:00 AM
From: KevinThompson	Respond to of 57584

For me, the most important factor in deciding whether or not to enter a trade is the risk / reward ratio. While sounding objective, this ratio is usually very subjective, but I can usually break it down at least into two categories: high risk and low risk. A company whose stock has been a high risk for a long period of time could just as easily become a company with a low risk stock - simply by getting a 50% haircut. (e.g. UIS - ouch... don't remind me...). Maybe nothing at the company has materially changed, but for some reason, WHAM... the market dumps it. Now its a great buy! with a much reduced risk / reward ratio. (The very same company, mind you.) Buying XYBR at $1.50 was great. Buying it at only 7/8, even better. I did both, and held for what seemed like a very long time. It seemed like very little risk at these levels. Then when it got a surge, its risk to hold it just went up - even though, as far as I could tell, nothing materially had changed at the company. Now we're hearing some rumors and the stock is really flying. I still don't know of anything really that has materially changed at the company, but the risk factor, for me anyway, would be just unbearable! I already took my reward part of the equation and I am happy about it. It might run to $10. Who knows - but I am working diligently on trying to win by managing my risk. Right now I think they're a little risky to keep. I'm hoping I haven't bored anyone. Best Regards, KevinT