To A Million » Dpmoreau

Maitain Your Quitting Standard

Dpmoreau — Sun, 19 Apr 2009 17:23:55 +0000

The first thing you have to do before learning what tools are available for you, is to determine the percentage of your money you are willing to lose. Once you determine that amount, you must stick to your guns. Never waver. There will be times that if you would have held on beyond your set amount you would have made money. These time happen few and far between, but rememeber they do happen. Try not to get hung up on those instances. If you do you are more likely to waver on times where you will lose big time. So find that percentage and stick to it.
Some of you may be struggling to find your percentage point. I may be able to help you there. If you want to determine the amount and you just can’t pinpoint, may I make a suggestion? Take $100, that you are going to trade with and turn into $1 bills. After you have your change go to the mall or a public park, and do it on a trading day. Begin walking and randomly handing your dollar bills to people you see (essentially and indirectly that’s what stock trading is) $1 at a time. When you finally cannot take it anymore, stop, and count what you have left. Add about $3 to what you have left and call that your Pecentage of Loss (POL, just made that up, I think).
I know what your thinking. What tree did you fall out of? That is a good waste of money and time. Of course, I would rather waste one trading day and a few bucks than never figure out where I should be stopping. However, if you would rather not be so eccentric, find you a good loser stock (one you know is gonna go under) and follow the same as above. Who knows, you may lose one day and save 100.
Once you have figured out you POL (remember never waver from that point), you need to start using a couple of tools to make sure you stay the course. One of those tools is the Stop order. The stop order basically sets a point, for you to sell your stock. Once the price of a stock reaches a certain point (set by you) the stop order becomes a market order and executes immediately at the best available price. Once your buy order for a stock is executed, I suggest you immediately set your Stop Order at you POL and don’t change it unless you are gaining (well talk more about that later).
You could, of course, just set a limit order at you POL and leave it at that. When a stock reaches, or in our case falls, to a set price, set by you, the order executes and sells your stock. Be careful with this one. If the stock, just so happens to skip over your set price, guess what, it don’t execute. Oops!! You could then find yourself well below your POL, which we don’t want to happen. So as with all things in the stock market, keep an eye on it.
One more for you. The trailing stop. Let’s say you are gaining (told you we would talk about it) and you don’t know where to get out. Your afraid of missing some good profit, but you don’t know how good. This is where the trailing stop comes in. The trailing stop, basically, follows your stock price a certain percentage or points, behind the current price. Hence, TRAILING stop. As long as the stock is going up the trailing stop will be following like a lost puppy. Once the stock falls back to the point of your trailing stop it becomes a market order and executes. The only guarantee you have is that you will not get the very top dollar for the stock (as if we ever do), but you may not get hammered by a rapidly falling stock either. If you feel comfortable with your gains you can always change your Trailing stop to a market or limit order and take your profits.
Well, I do believe I have said a mouthful. I will now shut up and get ready for tomorrow. With that happy trading and good luck.

Let’s Begin Shall We

Dpmoreau — Sun, 12 Apr 2009 17:18:37 +0000

All right, let us begin to quit. I guess one way to start is to look at what ?quit? means. According to Webster (always wanted to say that) quit means ?to depart from or out of?. Now I will use it in a sentence (mostly to take a stab at the current administration), ? I wish President Obama would quit making speeches.? As you can see, quitting, basically and roughly means to get the hell away or stop. We as traders need to know just that. Am I gonna give you a magic number to automatically flee from your losses, yes and no. Most people say 20% is a good time to get out. For some that may be to much, for most it is not enough. The key to quitting is finding that happy little point between being stupidly scared and just plain greedy. For example if you quit at a 1% loss, you sir, should get a CD and call it a day. However, If you do like someone I know (clearing my throat), you can lose a lot of money. Either way you lose.
I read an interesting article on the four animals (yes four for those that don’t know) of the Stock market. The bull and the bear, which we are all familiar with, and then there are the chickens and the pigs. The chickens don’t really need any explanation, but I’ll give one anyway. They are the guys, oops, people (politically correct form), that are to afraid to get in or hold a stock due to possible loss. Come on people (thats much better), risks are the very nature of the market. Next is the pig. This animal here are well loved by the bulls and the bears. The B&B’s derive a good chunk of income from the pigs, so they are always welcome with arms wide open. What makes a pig a pig? He doesn’t know when to quit. That’s it in a nutshell.
Now, last time I checked we are all human, so we all have some pig in us (read Animal Farm another great old political satire). We as traders must learn to control the pig in us. Sure we are here to make a million dollars in approx. 80 weeks, that in itself has some degree of greed. You MUST expect to take some losses. When you reach the point where a stock is falling and keeps going that way, remember, there is no magic fairy that will raise the stock so you can get out with a profit. If it’s going down, don’t keep watching it do so. Get out! Don’t let the pig in you tell you, ?Maybe if it will go up a little more I won’t take such a big loss.? The truth is most of the time it will keep going down while you wait for it to go up. So instead of biting the bullet and taking a 20% loss, you end up taking 40%, 50%, or even 60% losses. Learn to let go.
Don’t fret though, there are tools to help curb the greed. I will discuss these in my next blog. Being a noob I have some research to do before I start the next article. So I’ll end by saying happy trading and good luck on Monday.

A Horrible/Awesome Experience

Dpmoreau — Wed, 08 Apr 2009 17:11:38 +0000

Hey everyone, been awhile. I started this for all of us who do not know how to quit. Yes, I did name it after Stephen King’s short story (you should read it). With that let me begin my first little story. I took, lets call it a sabatical, after losing a good chunk on a stock. It wasn’t a very intelligent buy either, it was the noob in me. Anyway after my devistating loss I took my remaining cash (which was next to nothing) and dropped it on a company I found interesting. There was no one thing that stood out about them, they just seemed to make a product that improved the green factor a little. Nothing extravagant like a flying, fuel-cell, no-emission, could water all the animals on the planet, and rescue endangered species, vehicle. Just a small product. I said to myself, “What the hell, can’t lose to much more.” So I took my meager leftovers and bought the stock at .007. I checked it here and there. Guess what it tanked to a 60% loss (weeping), but hey what is 60% of hardly anything, why it’s next to nothing. So I held onto it and took my leave, checking on it here and there. Just so happens one day I look and I’ll be a mother *%$#*&, I was up 1000%. That’s right 1000% (weeping again). I gained back my losses and then alot. Now, I realize that I am a noob, so this was no great act of internal wisdom. I got lucky. Big time. I think the thing I’m trying to say here is you never know what’s gonna happen. Now that I know what it feels like to take a huge loss, I must say stocks are not your kids, if it gets bad enough you can let them go. “Well,” you may say, “you held on to another stock after huge losses and came back a big winner. What do you have to say about that?” To that I say, as I did before, Luck was just a lady to me, that is all. Take a lesson from someone who took a hit, don’t hold on to a loser. You may have been taught never to quit, but the stock market is a nice place to learn how to quit. So with that happy trading to all and I shall be posting a pick this weekend (probably gonna be SPNG, check it out).

P.S. The stock I made my gain on was PGYC. Yes, I am still holding onto some of my shares anticipating another pop.