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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Chris who wrote (22978)	5/8/2000 4:35:00 PM
From: Robert Graham	Read Replies (1) \| Respond to of 42787

Nothing has convinced me the selling is over by the way the NASDAQ ha been making its gains and the pattern of selling that has been in place. So the strength of the move down did not surprise me since I was prepared for more selling. However, as a side note, it is interesting to note that over more recent time, the basic material sector stocks has been getting more play, not the cyclics or the techs. On a seperate but related topic, it is interesting to note how traders measure and manage risk. This can tell me allot about their orientation in the market. This together with their approach to the market can tell me allot about their probable success in different markets. So I have two questions to pose in this regard, just for everyones consideration. This is no "evaluation", but posed to generate a worthwhile discussion on this topic. I. Now if a stock is bought at lets say 75 and it moves up to 100, what is the trader's exposure in the market? A. Initial cost at 75 minus profit made on the move to 100, on 25 points? In other words, the initial cost minus the amount above break even, which is the cost not yet covered by the profit made on the initial position? B. 25 points, the amount above break even, which is the profit at risk? C. The entire 100 points? II. How does this change for a short position? Lets say the stock was sold at 75 and now the price is at 100? A. 25 points, the amount the stock went against the initial position, the breakeven point? B. The entire 100 points, what the stock is worth to the long holder that the stock was borrowed from? C. There is no exposure since there is no "profit" at risk? D. This cannot be calculated since the amount on margin is not being considered? Note the difference between the two examples, where one shows a profit and the other shows a loss. More to come. :-) Bob Graham