Friday, September 26, 2008

It Is Still Up in the Air

The government bail-out plan is still undecided even after announcing an agreement yesterday. The republicans have left the table and are not going to rejoin talks this morning.

Well, well, what a twist. I personally got barbequed the other day during a meeting by someone that thought that we "rich people" that invest in the stock market shouldn't be bailed-out by the poor working people.

Wow. What wild misconceptions exist about this entire stock market dilemma and the cause. Excuse me now while I go count all of my money.

- Roger

Monday, September 22, 2008

The Cream Always Rises

To the top, that is. I waited a couple of days on the last set of picks until the market pulled back which it definitely did on Monday. I looked for the stocks that were up for the day and I quickly narrowed my 45 or so picks down to about 6 which was just enough to apply my filtering method.

This time,however, I found some strong turns upward on the %K of slow stochastics which really made it easy. Although bumpy times are ahead, there are always stocks that will out perform and clearly rise to the top!

- Roger

Lock in Profits with a Trailing Stop

One way of protecting you stock purchase is with a stop order, also known as a stop-loss. This is a standing sell order where your broker will sell your stock at a price (the stop) that you specify if it drops to that.

A variant is the trailing stop order. This type of stop-loss "follows" behind the stock price at a specified amount or percentage and increases as the stock price increases. For example, if you have a 5 percent trailing stop, the price at which the stock is sold is 5 percent less than its highest peak and not 5 percent behind the purchase price.

This is a good way to lock in profits as your stock rises and a good way to cut your losses if it turns south. Too tight of a stop on a wildly fluctuating stock might cause your stop to be executed too soon and too loose of a stop may cause extra losses.

I generally don't go more than 5 percent on a stop order while some people on a pretty stable equity might go as little as 3 percent. It's up to your risk tolerance and the volatility of the stock that you have purchased.

Have a good one,

Batten Down the Hatches

We're in for one heck of a ride this week as the market tries to figure out what's going on with the bail-out plan announced last week. Congress still has to approve it and that could be a choppy deal in of itself.

It's hard to completely remove emotions when it comes to trading but now's the time to practice a little discipline as we are going to see tremendous swings up and down. Just stay calm and remember: calmer seas are ahead of us, we just have to deal with a few tempests along the way.

- Roger