December 13, 2005 at 8:51 am | | Comments 1

The Do-Not-Trade List

In the world of small inconveniences, few things are worse than getting caught by some telemarketer at 7:05pm just after sitting down to some Pei Wei spicy chicken. I loved the introduction of the “do-not-call” list, and I quickly added my numbers to it.

Similarly, I’ve almost always had a “do-not-trade” list. There’s a ton of fish in the sea, so with literally thousands of stocks out there to trade, it’s OK to refuse a few of them.

It’s important to trade your personality, as well as the stocks that match it. That means there will just be some that don’t move the way you may anticipate. Some stocks give clearer signals than others, so why mess with the ones that don’t seem to work for you?

As a full-time trader now for several years, there have been plenty of stocks which looked good enough to me on a chart to warrant an entry. Soon after entering, however, some of them reversed and left me with a loser on my hands. Now I’m sure not the most stubborn trader around, but I am willing to give a good setup the benefit of the doubt in most cases and give it another shot if the stock breaks out again. After all, maybe my timing was just off. But in the case of the “do-not-trade” list, additional entries cost me additional dollars, requiring that a stock be added to the forbidden list for at least a short time.

Stocks on your D.N.T. list do not all have to remain there forever, although some will. Some stocks might have legal issues pending which will soon blow over and allow that stock to behave normally again. Others might just act funky and it’s best to avoid them as long as that is the case.

The goal is to turn a profit and make money. Don’t insist on being right! If you try a stock a couple of times and it’s not cooperating, move on to the next trading idea. There’s no reason to tie up valuable time and trading capital in a stock that you’re not in sync with. Keep at least a mental list of stocks which are costing you more money than they’re making you, and stay away from them!

Jeff White
President, The Stock Bandit, Inc.

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