Stops

I had someone tell me today that he never uses stops. I don't know about you, but as for me, that gives me the heebie jeebies. There is an art to placing your stops, and sometimes I'm right on the money, other times I'm off and so far off.

Up until about 3 yrs ago, I'd NEVER had a stop on ANY position. That's over $1M made without ANY stops. So, if I was so successful at making all that money without stops, why would I start using them.

Risk management.

People who do not manage their risk eventually do end up in the poor house. Okay, been there, done that, more than once. Not too smart, is it?

Honestly, I traded willy nilly and had no concept of what a real stop was probably until the end of 2005. So, really, I've been using stops now for 2.5 yrs. Have I been as successful as in the past with making money. Well, no. However, to gain nearly $1M to lose it all is very poor management.

It's not only what you make, but also more importantly, what you keep. Now, whether you purposefully give your money away to buy things or to charities or to save is another thing. That's all keeping it to me.

I am a person of great faith in Jesus Christ. My hope is in Him. However, I do not "hope" in the stock market. If my position goes against me, I'm outta there.

The person I chatted with today told me he is 85% correct and even if he is wrong the other 15% of the time, he's still way up. He's a swing trader, holding his positions overnight. I can't say I fully understand his trading, but it still seems scary to me to not have stops in place. Anything can happen.

For example, BSC, if you were in for the upside, not a good thing when that stock tanked. Of course, if things gap way against you, that's not a good thing. That's one of the reasons why I enjoy daytrading. Of course, I do miss some gaps in my favor, but that is okay. I haven't been real great at planning these gaps, so steadier money is less exciting, but it helps my accounts grow. Growing accounts in the positive direction is exciting to me and easier on my blood pressure.

I think it's always good to manage your risk. Letting things go willy nilly is not good trading. Though in the interim it may be okay, which it was for me for years, it ends up biting you in the butt. I have some huge bites in my bootie and they were not playful bites. Owww!!!

But, hey, if you insist on no stops and you seem to do okay, have at it. Not me. I want to live to trade another day and I want to continue to be a trader for many years to come, whether I'm a daytrader, swing, long term investor or what not.

Okay, enough of the ranting and raving. Had to get that out of my system.

Oh, yes, I've been rewarded by the market for many bad habits and actions in trading. It sort of lulls you into this false sense of security. The market is ruthless, but it can be tamed if you understand how to play it. Not managing risk is not a part of that, IMHO.
0 Responses

Amazon Store