Sunday, November 23, 2008

Holding on for Hope

Have you ever bought a stock, saw it plunge and then hold on to it for months waiting for it to rise from the ashes? At what point do you let it go?

Well, I have done that very thing before many times in my early years of trading. It took a long time for me to realize that dead money is just that: dead. It cannot do anything for you while it is sitting still.

I learned to cut dead money loose so that I could make it work for me somewhere else. True, some stocks will rebound and I'm not saying sell for a loss, but the grip of death on a stock that has went sour must be broken.

Remember that the money you are losing can be easily regained on a stock on the run. Hope is a good thing. Sooner or later, however, you must move on for better opportunities. Make your money work for you.

Have a good one,


  1. Roger,

    On average, do you use a trailing stop % or a trailing stop $

    Just curious as to what your risk percentage might be on any given trade.

    Do you cut at 10% of a loss or ride it out as far as 20%?

  2. I start out with a flat-out stop of 10% and if the stock looks like it will be accumulated in pre-hours I will quickly change to a trailing stop of 5% as the session starts. The activity in the first 30 minutes of trading can be deceiving, so I wait until the sheep are through grazing. I would never ride to 20, although once I rode a dog to 50 before I did a mercy killing of it. But that was a long time ago and I was young and inexperienced.