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 Limit
your risk to what you can afford to lose
From a member of a well know
group on Silicon Investor.
When I first joined a well known
stock picker's group I had about
20K seed money to invest. While
I am an experienced Mid-Cap
Corporate COO, Private business
owner, and have many excellent
long term investments, a large
401-K, paid-off home, etc. and
keep 100K in a GNMA account for
emergency cash, I found I did
not know squat about
day-trading. Newbie was
even a term too good for me.
Background marginally counts.
In
my case it helped me act before
thinking! I acted on hype on the
treads ..not fact. I got lucky
with a few picks early. Built
the 20K to 40K, then within a
week dropped 28K waiting for
divine intervention on stocks
that had hit their highs. Sure
they'd come back just like my
401-K, and annuities, all long
term investments. Newbie
mentality. Divine intervention
does not happen in
day-trading!!!!
I
tend to learn quick when money
is taken from me...first thing I
learned is that I knew nothing,
absolutely nothing, about
day-trading. I went out and
bought some books mentioned on
the SI thread. I also listened
to his advise to learn one
stock. Picked CMGI as was a
suggestion. I made small
100 - 200 share trades in the
$60's and $70's. Learned the
daily pattern of the stock. Made
money playing the trends. If the
stock was going the wrong way, I
sold and took my loss happily
and immediately. I was
successful about 4 of every 6
trades with this stock. Trading
CMGI, I got my seed money to
$61K. I went to their
stockholders meeting on Dec. 17,
only 25 miles from my house. I
listened to management, read
their eyes, checked their
pulse....but, checked the
charts, the news, and did DD up
the gazoo!
To
make long story short, I bought
500 CMGI at 98. Sold at 134.
Bought it back at 111 sold at
115 last Friday morning. Bought
at 106+ last Friday at the close
of the market. Sold at 131 at
market open on Wednesday. Bought
it back at 128 5 minutes
later. Sold at 206 Friday PM.
TOOK THE PROFIT!
I
also bought and day-traded this
stock in 100 and 200 lots for
anywhere from +2 to +10. Also,
unlike perfect traders, I bought
it sometimes going the wrong
way. If the trend was bad, I
sold it immediately and took a
small loss -- planned reentry. I
have learned not to watch the
ticker and go blind. On Friday,
I thought I had the trend.
Bought 200 at 198. Stock started
down, I put in a conservative
stop loss.. no problem. I made a
new pot of coffee and took a
walk. I came back to screen 15
minutes later and sold at 205!
I
added up my gains and losses
this weekend on the last 3
months of trading.
$117,00.
I
went all cash this weekend --
learned unabomber lesson on
ASTM, GERN and a few others.
Doing my DD for Monday - don't
mind missing a gap. I will buy
on the pullback if I feel the
stock is a good day trade.
I
have plenty to learn, and I mean
PLENTY! But newbees need to
listen to sound advise. IRC has
been great.. but, hype is a
killer. newbees like me need to
learn who is giving good info,
hyping or P&D type. I am getting
a better feel on this. Also, I'm
doing better on other trades,
but I still need to get Level
II. I will get it this week.
Having been to the pulse, I am
now much more cautious of my day
and position trades than when I
started.
Anyway thanks. My wife now
understands why I like a 10
second commute to my home office
versus a one hour commute to the
office and the corporate BS. At
48, I may need to return to it,
but not for now.
Please continue to encourage
newbees to go slow, paper trade,
pick a stock to follow, learn
DD, don't listen to every hype
on the web or IRC. You can make
money; 4 out of 5 days a week is
my goal.
Thanks again,
John C
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