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Strategies & Market Trends : The Final Frontier - Online Remote Trading -- Ignore unavailable to you. Want to Upgrade?

To: steve goldman who wrote (5484)	10/14/1998 4:15:00 PM
From: steve goldman	Read Replies (3) \| Respond to of 12617

Stops/Limits..The foundation of any successful trader! Irby has talked about it and many people discuss it, but I wanted to take a moment to reiterate what I feel is the number one factor in successful trading...sell-side discipline. Many individuals have great skill in picking stocks, seeing accumulation, but the number one failing of most traders is the inability to maintain stops and losses. Many traders make a lot of 1/4s, 3/8s, etc. only to get knocked around for multipoint losses. There is a phrase Bernie uses a lot...eating like a bird and sh*tting like an elephant...you cant be successful in any business, stocks or selling bikes if you go for $500 gains but experience $1500 losses. Set stops. Its simple. You buy a stock, have some schedule, a guage that says that 20 to 30 buck stocks use a 5/16 top, 50 to 70 buck stocks use a 1/2 buck stop, etc. If you dont have the discipline to exercise the stop yourself, put it on the books. having it on the books offers a number of advantages...first, you are less likely to lapse in discipline and will mostly likely get filled at your price. You will also be near first in line and have a greater chance of getting your stop at 5/16 rather than another 1/8 or more in slippage because you waited till sellers really started hit the bids at your stop. I know many successful traders that will adjust their stops upwards as their long positions become profitable, allowing the stock to run, leaving open the upside and settting a stop to take them out, be it a profit or loss, on the way back down. In this case, you would need to continuously (ever so often) adjust your stop upward as the stock increases. Make sure you firm takes stops on OTC and listed stocks if you are going to utilize this discipline. May do not. We do take stops and limits particularly because we dont make markets reducing the conflict of interest. In my experience, discipline is something that is easy to talk about , yet hard to exercise. I see many traders watching stocks like a deer in headlights..that is, they buy it at 12, set a mental stop at 11 3/4, yet it hits 3/4 and they start with all kinds of mental gymnastics why its 'just about to turn around'. Next thing you know the 3/4 bid is gone and you're looking at 11/16...well now the real selling is starting and you are looking at 1/2. ..and who the heck wants to take a 1/2 loss , its 'gotta' turn around...next you take it home at 11 because a buck on a 12 stock is too much and its gotta bounce over night...that right there is the kiss of death to a trader...you cant hedge risk taking them home.. The short of it....use stops. If you dont trust yourself with your commitment to discipline, put them on religiously, the second you getyour report. This leaves you free to focus on other picks and takes the emotional issues out of trading. Regards, Steve@yamner.com yamner.com