| Tuesday, Jan 26, 2010
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| Knowing when to Bail! |
| By Invested Central |
| Tuesday, Jan 26, 2010 11:42 |
If you have even been in a boat where the water was starting to come over the sides, you probably pitched in and helped to bail the water out. After all, if too much water got into the boat it would ultimately sink, and who wants to go down with the ship? When you are trading a stock and you have a good idea where the next support level is, make sure you are ready to pull the trigger on the trade if that support level is breeched, particularly if that support is breeched on heavy volume. Too many traders wait for the breech then keep waiting to see if the stock will recover, and often it simply won't, and before you know it, the stock is down further than you could imagine. Then, if you continue to hold, you may find it takes a very long time for that stock to retest what now has become resistance. Increase your chances for success as a trader by having that bucket ready to bail you out, otherwise, you might just sink! |
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| Monday, Jan 18, 2010
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| Staying Calm |
| By Invested Central |
| Monday, Jan 18, 2010 01:26 |
| When you are a trader, it is imperative that you stay calm when you find yourself in a stressful, decision making situation. Everything can be going against you and you may find yourself in panic mode, unable to stand the stress that goes along with a trade coming unglued.
When this happens, you need to try to quickly asses the situation to see if you have a real problem on your hand or if you are overreacting to something that might not be as bad as it seems.
You can start by collecting yourself, remembering all you have learned and taking all of that knowledge and applying it to the situation at hand. That will at least allow you to assess intelligently, instead of emotionally.
Once you have assessed by applying your knowledge, you can move into action. Is the trade on the disaster course or is it something that is still within range of where you thought it might go? Has the trade crossed critical barriers and on sufficient volume to warrant quick exit action? Is it a situation that is really not as bad as it seems and if you walk away might take the pressure off you for a re-evaluation once you take a break?
It's really all about staying calm when things seem to be crashing down all around you. Let everyone else do the panicking, not you. |
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| Monday, Jan 11, 2010
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| Watch out for "Close, but no Cigar" |
| By Invested Central |
| Monday, Jan 11, 2010 07:13 |
Everyone knows that expression, close but no cigar. You get tantalizingly close to achieving something but not quite. The same thing can happen when you are looking for a stock breakout - it gets very, very close but then out of nowhere, down it goes. As an example, say you identified a stock that showed strong resistance at $25. The stock starts getting close, say $24.90, and you get very tempted to make your move. The stock moves up another 5 cents to $24.95 and you can wait no longer. You make your move figuring what's one lousy nickel? You get your position settled then notice that the stock price starts to drift down, close to the $24.50 range. You figure no big deal, the breakout is still in sight, but then realize the volume is extremely light and you have just been sucked into a false breakout. If this has happened to you more than once, you are not alone. It happens to traders on a regular basis, because they become impatient and want to get ahead of the pack before an actual breakout occurs. Unfortunately, it is one of the big reasons many traders get hit in the pocket book. You need to practice waiting very patiently to see a breakout actually confirmed. Who are you hurting but yourself if you act prematurely? Just wait for the actual break out to occur, make sure the volume is there as well, make your move and your chances to succeed will go up dramatically. |
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