For Immediate Release
Chicago, IL – March 23, 2010 – Zacks highlights commentary from People and Picks Trader “rjm77me”.
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Hope Is Not a Trading Strategy – What Is Your Opinion?
I am not sure if adding a buy to a losing position makes money. I lost 70% of the time when averaging down and made money 30% of the time.
It is the ego thing that one must be a winner, and if the first decision is right then buying cheaper is OK. Your stock may the best in the universe [but] if it does not meet your holding pattern time frame then the cheapest way is just sell it and take loss. One ties up funds which should be making money. If one has unlimited funds and can hold it forever then it does not matter.
Recent Example – I was in a bottom fishing game with QUALCOMM (QCOM) and the market had other views and kept QCOM down in the basement. QCOM is not a bad company – the market views did not agree with my time frame of 30 days.
The stock will probably go up from here. The options were expiring last Friday. The last two days saved me from a major loss on my options. A Barrons article came to my rescue just in time to move the stock up and above my strike price. I still lost $350 on the trade. Bullish mention on Fast Money and Barrons on the same evening saved me just in time. So I used up one of 30% chance in this one trade.
One of my friends built up a 9000 share position in a stock after reading blogs and hearing conference calls. Any CEO or CFO can be bullish. The question is how one accepts it. Now he is sitting on 23% loss or about $16,000 down. It is affecting his daily trade pattern as half of the time is wasted in watching every penny move in the stock. It consumed 60% of his investment. He needs to worry as he is using margin for this trade.
There is not much to say. Two trading rules were broken – never put too many eggs in one basket and second do not trade without some pre-determined stop loss. Third rule is where there is hope….
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