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To: AlienTech who wrote (3993)	11/16/1997 6:03:00 PM
From: Fred Weiss	Respond to of 120523

All of which brings a couple of analogies to mind. The first is the story of *The Emperor's New Clothes. Which is to say the establishment (the house) is perpetually running a hoax on the retail investor. Until each of us starts to recognize that the Emperor is naked, we will continue to be taken in. The rules of how to play say that you have to trade with stop loss limits. The whipsaw action that is commonplace as a result of the disinformation causes lots of good judgment to become losing trades. My most recent loss was a result of the CNBC statement that INTC had announced a huge stock buyback which was later denied by INTC. The second analogy is a simple truth of casino gambling that was related to me many years ago. As you may be aware, most casino players are obsessed with knowing and reducing the house edge. Counting cards and so on. Yet many players are unaware of what the real house edge is. It is simply the fact that they have an unlimited bankroll. The house can afford almost unlimited losses while the player cannot. This edge is why most gamblers in casinos lose. The same is true for stock traders and speculators. This is why money management and psychology are stressed so heavily in most books covering stock trading. I have stopped believing in the basic truism of cut your losses early and let your profits run*. This seems to be at the heart of the house's game plan. I think the best approach is to be very nimble and very patient at the same time. I now set very reasonable profit targets and ride through down periods taking in a little return by selling covered calls. I frequently will exit a trade at a profit and leave more profits on the table. This is the price one pays by not playing their game. Trader Spud