RSSArchive for August, 2006

3 Signs You Have a Pet Stock

August 23, 2006 at 12:03 pm

One of my top 5 trading books is How I Made $2,000,000 in the Stock Market by Nicolas Darvas. From time to time I re-read this book because there are some good lessons and reminders in it. On page 11, Darvas refers to stocks he was trading in a funny way but one which all traders have been familiar with at one time or another:

“…For some of them I acquired a special liking. This came about for different reasons. Sometimes it was because they were given to me by a good friend of mine – other times, because I had started by making money with them. This led me to prefer these stocks more than others, and before I knew what I was doing I had started to keep ‘pets’.

I thought of them as something belonging to me, like members of my family. I praised their virtues day and night. I talked about them as one talks about his children. It did not bother me that no one else could see any special virtue in my pet stocks to distinguish them from any other stocks. This state of mind lasted until I realized that my pet stocks were causing me my heaviest losses.”

No doubt we’ve all encountered our share of “pet” stocks, but are you holding onto any of them right now? Here are three signs you may have a pet stock:

Slay Your Trading Giants

August 9, 2006 at 5:20 pm

They’re waiting for you when you wake up. They may have prevented you from sleeping at all.

They might come around before the opening bell, and sometimes they won’t leave even after the closing bell rings.

If you don’t skip a trade because of them, then you’re likely to hear them after your order gets filled.

They are your trading giants, filling your head with anything but confidence, and you must overcome them if you’re going to make it in this business!

Gotta Love Second Chances

August 7, 2006 at 4:42 pm

Second chances are so nice to get, even if we don’t deserve them! If you pay attention in this choppy market environment, you’ll often find that you get multiple chances to get into a trade (and profit).

This could be viewed as frustrating, as a stock breaks down or breaks out, only to quickly return to the support or resistance level. However, it can be great if you get caught snoozing on the first move!

Last night in my stock newsletter, I highlighted NTRI as a potential short. NTRI had broken down a couple of weeks ago and since then had formed a bear pennant pattern. A break below $51.00 at the lower trend line was the trigger for my short sale.

Bear Pennant Pattern (Click image for full size) NTRI was primed and ready to break down from this bear pennant pattern, with the trigger being a break of the lower trend line at $51.00.

NTRI triggered soon after the open today and I was able to short sell it as it broke through the $51.00 level (thank you ARCA market sell/short!). Had I missed the first entry, I would have had another shot at getting in the trade by offering into the first bounce which carried it right back up to the $51.00 level (funny how that works!).

Second Chance Entry (Click image for full size) NTRI broke the $51.00 level right off the open, but the bounce which followed provided another shot at entering this trade. Gotta love those second chances!

Fortunately, NTRI drifted lower throughout the day, providing a nice trade whether you caught the first or second entry. In fact, if you don’t like to trade breakouts/breakdowns, you may actually prefer to bid into pullbacks or offer into bounces in order to establish a position – if so, this is an excellent market for you. Be on the lookout for second chance entries in these choppy conditions, and you’re sure to find some second chances to profit!

Jeff White
President, The Stock Bandit, Inc.

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[tags]Stocks, Investing, Stock Trading, Short Sell, Trading[/tags]

Keep it in Perspective

August 1, 2006 at 11:22 pm

I just read Toddo’s latest post at MarketWatch and although I was already somewhat familiar with his story, reading it was 5 minutes very well spent.

He wrote it at a good time for a lot of traders caught on the wrong side of the market lately, so if that’s you be sure to check it out. His perspective is honest and clear….. “be careful what you wish for,” he even warns. At the end of the day, he’s dead right. Regardless of what you’ve made (or lost) as a trader, you’re going to need people by your side to make it even halfway worth while.

If you’re struggling right now, keep things in perspective.