Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Want to make $1000 a week trading.....I'm going to try!!! -- Ignore unavailable to you. Want to Upgrade?

To: Dan Ross who wrote (469)	1/24/1998 5:08:00 PM
From: Susan Saline	Read Replies (3) \| Respond to of 1100

Print this, read this, reread this, MANY times, until it sinks in. Who am I talking to? Myself, you, and every short term trader. Without this rule, you and I will not suceed. Copied from another thread......... Stop Losses& Risk I've heard a lot of confusion lately from new traders regarding stop-losses...many of the new investing books recommend 8-10%; you must remember this is for INVESTOR's, not traders. What i have been using with good success is a formula put forth by Dr. Alexander Elder in his excellent book, "Trading for a living" where he suggests that you limit your losses to 1-2% of your entire trading stake, before margin, PER TRADE. If you keep to this formula, your portfolio can take the inevitable string of hits without serious damage. So if your trading w/$10,000 capital, the largest hit you can take is two hundred bucks, including commission. This naturally brings up the size of your position in relation to your stop loss. You must decide whether to limit your losses consistantly to an eighth, and hence trade larger positions, with a willingness to re-enter the trade; or build in your tolerance for Market noise (normal price fluctuations, or MM's shaking the tree) by taking smaller positions, with say a half point stop-loss built in. Another point on stop-losses: they must be mental, if your trading Nasdaq; if you place a physical stop-loss, a MM will drop his price for an instant to trigger your stop, and steal your money...guaranteed. On a losing streak? A good practice is to quit trading for a day or two and paper trade if you take three hits in a row; if you're down 8-10%, quit for the month and stick to paper trading the rest of the month. Beware of overtrading: if you're up a point or two for the day...take the rest of the day off! Get away from the screen...go play. I have found myself overtrading after making some good plays....and i get over confident and take on more risk than i normally would, and would have fared much better if i had quit while i was ahead. For some reason, often we find a reason to gamble instead of trade when we're up, with the rationale that it's ok to put the money you just made at risk. Thats a losers headset over time. A nice trick is to try cutting your number of trades in half for a week... you may be surprised at the results. If you are patient and very selective in your trades, your odd's and confidence increase dramatically. If you cannot wait patiently for the market to offer a solid play, and/or are trading for the rush...you probably should not be trading. In a macabre, but what i think to be an accurate analogy: govenment statistics show that during the Vietnam war, American infantry burnt up 200,000 rounds to get a single body count....whereas the trained sniper averaged 1.3 bullets per kill. Hope this helps someone. -Coyoti

To: Dan Ross who wrote (469)	1/24/1998 5:22:00 PM
From: Susan Saline	Read Replies (3) \| Respond to of 1100

LOSSES Little story here... My 5000 went to UTI and TLK which I used no stop loss on either UTI my last purchase was at 18 now, about a week later it is trading at 15. It did gap down about a dollar the day after I bot it. Did I take the 1 dollar loss? Heck no, I thought...hoped it would bounce back. Did it? NO, it did not. I held, and watched it fall another couple bucks. Hindsight says shoulda sold and taken the $1 loss. BIG ERROR Did I learn? Heck no, I let it happen again with TLK...same senario The 5000 is tied up here. Dead money. Another trade I have made recently is... EGHT bot for dead cat bounce NO bounce bot 8 1/8 sold 7 1/8 Did I learn? YES YES YES and I was happy to take the loss, I am finallylearning What I am learning is....with no fun tickets (money) you cannot play the game, and that is definately NOT fun. I tell you all this little story, so others may learn that such a silly little rule can make a BIG difference between being able to play and NOT being able to play. Sue