Last weekend I wrote about some market cliches so we could think
about their efficacy. While these sayings have become conventional
wisdom, the real question for us as traders and investors is are they
complete and do they work; do they produce the intended result? This
week, I would like to examine a couple more with the same objective in
mind. One of my favorites is: "You can't go broke makin' a profit." I
always say that to myself after I have gotten out of a position only to
see it take off after I exited.
"You can't go broke makin' a profit" is only true if our profits
are greater than our losses. The problem with the concept is that it
doesn't recognize the importance of letting profits run. No doubt it is
better to take profit than suffer a loss, but the real key is when to
take the profit. Should we pull the plug and exit a play as soon as it
turns profitable? Once there is a profit, what should we do to avoid
letting it turn into a loss? How long or far should we let the profit
run before we close out? Again, as we examine the statement, it can
result in the formation of an exit strategy. It seems to me that we can
follow the direction of the cliche by recognizing the importance of
keeping a profit so we might want to trail a stop once our position is
in the profit column or we may set an exit based on the crossing of a
moving average or maybe follow Japanese candlesticks, but whatever we
choose, we need to have a strategy first to preserve the profit and
second to let it run or at least try to avoid exiting too early.
Another well-known market saying is: "buy on the rumor, sell on
the news." I think this one is pretty valuable with minor
modification. Buying on the rumor probably works pretty well as long as
we hear the rumor and hear it fairly early in the game. Hearing the rumor
shortly before the news comes out may not work so well. The theory
behind the saying is that the rumor generates excitement and excitement
causes movement in the price of the stock. Generally, once the news
comes out, the excitement is over. There is no more anticipation because
we now have the information; we know the news. Once that happens, the
run-up is often over as well and we may see a downturn. I suspect the
better saying is: "buy on the rumor if you believe there is a
reasonable time before the news comes out and sell right before the
news is announced." That pre-supposes we know when the news is going to
be announced. In some cases, we may know when the news will be
announced, in others, it can only be a guess. In either event, once
again, we should have our exit strategy in place before we buy.
Is the trend really your friend and do you earn on the turn?
If you're not sick of these cliches by now, we may take a look at those
two down the road.
Thank you to the many of you who have bought my book,
"Trade Your Way to Wealth." I appreciate your kind comments on the book and
genuinely hope it advances your trading knowledge and helps you become
an even better trader and investor.
You can comment on this article on my blog!
Good Trading!
Bill Kraft
Editor of $10 Trader, Option Trader and Trend Trader
"Trade Your Way to Wealth" by Bill Kraft is an Amazon.com best seller!
Mr. Kraft's past articles are posted on our website for your review.
$10 TRADER -- by Bill Kraft
We really enjoy trading stocks that are $10 and under. Often they provide the chance to enjoy high percentage gains and, of course, at worst, the risk is limited to what we paid for the stock.
Details Here.
OPTION TRADER -- by Bill Kraft
Our Option Trading Service is for conservative traders that understand leverage principles. We focus on powerful option trading strategies that place volatility and momentum in your favor. And we pride ourselves on minimizing our losses. We always know our downside potential in a trade.
Details Here.
TREND TRADER -- by Bill Kraft
Trend trading as we try to practice it is a form of momentum trading. We prefer to try to capture profit out of the middle of the trend rather than try to catch reversal at bottoms and tops.
Details Here.
Trading is a path to financial independence, personal freedom, and wealth. But the path is immensely challenging and only a few emerge victorious. Bill Kraft's book Trade Your Way to Wealth, an Amazon.com "best seller", shows you the path.
SUCCESS TRADING GROUP -- by Eric Aafedt
52 Wins in 52 Weeks
Our Success Trading service delivers quality trading ideas for the elite investor that has the financial wherewithal and market nimbleness to profit on small moves in a stock's price. Become a member and you will be provided with email and/or PDA alerts intended to provide you with the opportunity to make many, many profitable trades.
Our Success Trading Group has closed 52 Wins in 52 Weeks and over 330 winning trades and only 9 losing trades on our Main Trade Table.
Details Here.
DIVIDEND INVESTOR -- by Eric Aafedt
Perfect for your IRA! Our Dividend Investor service focuses solely on the "best of the best" dividend paying stocks. Many of the stocks that we will be buying in our Dividend Investor service raise their dividends almost every year. Year after year! This is powerful. We buy these stocks for their powerful dividend producing income; and we will also buy these with a purpose to make capital gains as the stock increases in value.
Feel free to sign-up for a free 30-day trial. During such time you can review our Trade Table and see the type of stocks we are buying. You will also receive all the new investing alerts we send during your trial period. Again, many of the stocks that we will be buying in our Dividend Investor service raise their dividends almost every year. Year after year! This is powerful. Don't miss out on this service!
While we titled this service an "investor" service, we also believe these stocks are solid for the "trader" in you. With these stocks, we believe an exit point of 3% above the buy price is generally appropriate for traders. And, in fact, our first 46 positions have hit our 3% target subsequent to the buy alert!
Details Here.
COVERED CALL SERVICE -- by the Covered Call Research Team
Details Here.
|
Success Trading Group Trade the same stocks over and over. 330 trades with only 9 losses on our Main Trade Table!
Trend Trader "The Trend Is Your Friend". Utilize trends and momentum in your stock trading!
Option Trader Use the power and leverage inherent in option trading to your advantage!
$10 Trader Focusing on stocks under $10 per share!
Dividend Investor Perfect for your IRA! Quality dividend paying stocks!
Covered Calls Conservative option writing -- Allowed in your IRA!
|
|
The foregoing is commentary for informational purposes only. All statements and expressions are the opinions of Online Investment Services, LP. or the associated editor. This information is not meant to be a solicitation or recommendation to buy, sell, or hold securities. Past results do not guarantee future performance. Stock investing is risky. Option trading is risky. Futures trading entails great risk where one can lose more than his account balance. We are not licensed or registered in the securities or futures industries. The information presented herein and on the related web sites is presented "as is" without warranty of any kind either express or implied. Although the information has been obtained or derived from sources believed to be reliable, but its accuracy is not guaranteed. The security portfolios of writers for this issue may, in some instances, include securities mentioned herein and on the related web site. Estimates, assumptions and other forward-looking information are subject to the limits of forecasting. Actual future developments may differ materially due to many factors. No one associated herewith receives compensation in any manner from any of the companies that are discussed in this newsletter or on the related websites. By accepting emails, including various paid subscriptions and free email reports and newsletters, you agree to the terms of the MarketFN.com's website Disclaimer, Privacy Policy and Terms of Use provisions as such may be amended from time to time.
This email was sent to ~~EMAIL~~.
|
|
|
|
|
