When the stock market is going up and all your stocks and mutual funds are making money you feel like a genius. It is too bad that some folks don't remember what happened in 2000. Of course, right now we are in one of those genius phases.
Your broker and financial planner are encouraging you to buy, buy, buy. And I can't fault that at this time. You remember back in 2000 how many times they told you to buy, buy, buy while the market was going down, down, down. Are we in another of those periods now that are leading up to a humongous crash? Hey, I don't predict, but I do listen to the voice of the market.
The great Wall Street mantra is "buy a good stock and put it away". Did you keep WorldCom and Global Crossing? Even if these were exceptions because of fraud a smart investor would not have lost any money. In fact he could have made a nice profit. But Al, they went under! Yes, I know, but the smart money still made out because they sold near the top.
As a former exchange member and floor trader I was not right every time I bought something and I especially did not like giving back nice profits that had accumulated. You don't have to be psychic to know when to sell and don't think you are going to be able to pick the top. A really smart trader waits for a stock or fund to start up and then jumps on it with both feet. When it starts down he jumps off looking for another equity that is going up. The wise trader knows he can't buy the bottom and sell the top. What he wants is a big bite out of the middle.
When you make a sandwich most of the meat is in the center and a professional trader does the same with his trading. He wants to take a bite out of the middle of the move. You can do this too by looking for stocks, mutual funds or Exchange Traded Funds that have a nice upward pattern. As I said before buying is not the secret. Then what is?
You must learn to sell - for two reasons. First to protect your equity after your initial purchase and second to keep from giving back profits you have made as the equity advances. The great Wall Street secret is an exit strategy: knowing when to sell. Unless you learn to sell you will not be successful in the market. Brokerage companies do not want you to sell and rarely issue sell signals. You must decide how much you are willing to risk before you buy.
The simplest way is with a percentage stop loss order of 5%, 7%, 10%, 12%, whatever you can live with. Instruct your broker to place a trialing stop or you can change it yourself every week. Do not lower a stop.
Selling is the great secret you will never hear from your broker.
Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.
Copyright 2005
recurring maid service Buffalo Grove ..On Monday, November 25, 2000 Investor's Business Daily listed on... Read More
The trash business in its efforts to cook their books... Read More
If you are fed up with early redemption charges and... Read More
During the month of January the Dow Jones Industrial Average,... Read More
The stock market has been in an up trend for... Read More
You have heard about a particular mutual fund from a... Read More
For some "long term" would mean holding a stock position... Read More
There can't be many traders who haven't at least considered... Read More
You may have wondered why your mutual funds have been... Read More
As a novice trader, you'll often feel the need to... Read More
Reduce your investing and stock market risks by:Setting your sights... Read More
After the publication of the first part of this two... Read More
Sometimes the best way of lowering exposure to risk is... Read More
As I have said many times before in this column... Read More
If you are going to be a winner in the... Read More
This is the continuing story of our two imaginary traders,... Read More
One Saturday morning, while he was sitting at his computer... Read More
Using Swing Trading Strategies and Technical Analysis when Trading Stocks... Read More
Wall Street's watchword has always been diversification, but what does... Read More
TOO OFTEN, INVESTORS SIMPLY CHOOSE TO follow the crowd. This... Read More
Someday you may want to retire and continue to live... Read More
Let me start by saying that...Most online brokers do not... Read More
Jack and Jill went up the hill to fetch a... Read More
The Macedonian Stock Exchange (MSE) is not operating successfully. True,... Read More
One of the main reasons many of us get into... Read More
premium house cleaning Glenview ..A 'stock option' is a contract between two parties giving... Read More
Today we are inundated with tons of information about the... Read More
Do you own any mutual funds? In an IRA or... Read More
The stock market has been going up for more than... Read More
Picking a beaten-down stock requires a different kind of selection... Read More
"There is nothing more frightful than ignorance in action!" Johann... Read More
You probably have been told that options are risky. Even... Read More
For some "long term" would mean holding a stock position... Read More
This is the continuing story of our two imaginary traders,... Read More
1. Do not spread your money too thin.My friend has... Read More
If you don't know what a Roth IRA is then... Read More
In a previously written article, we expanded the use of... Read More
The stock market can present you with a lot of... Read More
After some forty years of banking and investments, I retired... Read More
Investing in long-term financial vehicles give you the most gains... Read More
The Shadow knows. Remember him? It seems a shadow has... Read More
If you were to find that you had some severe... Read More
Did you run out to buy that duct tape yet?... Read More
The stock market has been in an up trend for... Read More
Should the market turn against you, it is important that... Read More
Sometime in the third quarter of 1997, someone told me... Read More
You remember the story about the frog that was put... Read More
Maximizing a stock market investmentThere are several factors an investor... Read More
I am hearing predictions by brokers, financial planners, talk show... Read More
Wall Street has been preaching the doctrine of Buy and... Read More
Stocks & Mutual Fund |