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

To: The Flying Crane who wrote (30810)	7/29/2000 8:22:30 AM
From: DlphcOracl	Respond to of 57584

The Flying Crane: Your "deer in the headlight" analogy is dead on regarding the inability of many investors to quickly cut losses before they become big losses. This is a problem I have and I would recommend a simple method of avoiding this -- Wm. O'Neill, of Investors Business Daily, recommends selling anything that falls below 8% of your initial investment price. Every time I have tried to "make an exception" to his rule, I have found myself with a 15-25% loss. What I now do is simple and effective. After I buy a stock, I set a "Stop Sell" order at 8% below the price at which I have bought the stock, Good Till Cancelled (GTC). If my Stop Sell order is triggered, I do not consider re-entering the stock for at least a week. In this way, my "Sell" decision is made for me and I can no longer "talk my way out of it".

To: The Flying Crane who wrote (30810)	7/29/2000 9:17:07 AM
From: Rande Is	Read Replies (3) \| Respond to of 57584

Thanks for sharing your mind tricks with us, Crane. Getting out of stocks when the market is turning Southward for an extended length of time is critical to keeping the profits we worked so hard to gain. This is why I've been harping on short-selling. . .which naturally places our collective minds in a downdraft during August. I don't wish to be misunderstood, by anyone seeing me playing longs, that it is OK to run out and pick some longs. I believe that is exactly what happened FOLLOWING the March selloff. Many saw me making long swing trades and thought it was OK to get back in the water. Then along comes another massive drop. Next week, we may see a sellable rebound. Bloch said so, and common sense will tell us that 7 declining days out of 9 means the market is due for a little relief. I don't think we'll get it on Monday, as I think we'll see more triple digit declines then. . . but perhaps by Tuesday or Wednesday, I may jump into some longs for the swing bounce. . .but I will be out within 48 hours guaranteed. . . and expect the next move to be sharp and downward. When I do this. . .as I've done many times. . .I find the "Early Bouncers" . . . everyone should have those memorized from the Spring. . . and pounce on them as low as I can get them for the bounce play. But this does not mean to run out and buy up any long that comes along. . .we took extra care to select the very best bouncers in the Spring and did quite well with them. As for tricking the mind, by convincing yourself you are going to buy back lower, so it is OK to sell. The best way to start that, I've found, is to actually believe it. So many times I've intended to buy back. The problem all too often is that I SHOULD HAVE REMEMBERED to actually buy the darn things back. That is how SDLI and ETEK slipped out from my grasp. . . arggh! So once again, discipline comes heavily into play. I think I would like a chalkboard next to me, while trading. . .to remind me of my current strategy and to look at the stocks that I intend on owning by the end of the day or week. Currently, I write things on paper. . .but after a while, whether it is stacks of paper, notebooks or post-its, the paper becomes a monster that you can no longer see. I believe a chalkboard is best. . . .perhaps I'll pick one up today. That way, I can erase them off when I get them . . . the object of the "game" is to clear the blackboard. Ever accidentally buy a stock you wanted to short? Ouch! That one is difficult to get out of without an extra loss. I did it yesterday with MPPP. . . no way do I want to own that company. . .I think they will go bankrupt before long. . . [they just paid EMI $30 mil, and have yet to pay Sony and UMG. . .it will take many years to generate the sort of revenues that will just break them even to where they were pre-trial, especially with the lower margins that come with all these licensing deals with the majors] . . I must stop placing buys when I meant to place sells. . . .my most common error. . . . must be my "inner bull" that runs my trading day. <G> There's a book in there somewhere. . . ah! "The Art of Selling. . . .Learning to Calm Your Inner Bull" Any writers in the crowd want to co-author that one? Rande Is