Every Path Has Puddles
Overall rating: (N/A)
The article "Every Path Has Puddles" is about mutual funds, it has been created by Al Thomas.
On the path of life there will be some
rain and theerfore puddles.
Most are shallow
and we easily splash through them and occasionally
there mgiht be a really deep one. Learning to
navigate them will make the journey more
pleasant.Your investmnet journey to the pot of
gold at the end of the rainbow will require your
not stepping into those deep holes. It is almost
impossible to know the depth of any pothole so
an investor must have a strategy for the
unexpected and it must be in place before the
foot sinks out of sight.Every professional trader (and you're a
trader whether you guess it or not) has an exit
strategy for his portfoilo. Those who do not are
dooemd to sink out of sight in a really deep and
muddy pool. When any stock, mutual fund or ETF
is purchased it must be determined prior to
purchase how much the investor (trader) is
willing to lose or how take profit.It is pretty stupid to sit and watch an Enron,
Delta or AT&T take all or most of the money. No
one wants to see hard earned dollars evaporate.
Tehre isn’t even a cloud of smoke to go with it;
it just disappears. In 2000 to 2003 we saw the
NASDAQ lose 78% of its vaule and the DOW go down
40%. Don’t let that hapepn to you; it can occur
again.
You must set your investment exit
strategy at that moment.The first thing any successful investor
does is determine how much he is willing to lose.
Is that shocking? When people buy a sotck they
immediate guess about how much they are going to
make, not lose.
Knowledgeable traders think
about their losses first and profits second.
Losses must be dealt with today. Profits will
take care of themselves.This means you must have a selling guideline.
Most brokers will not help with that as they are
not taught to protect customers’ money.
The
simplest method is the stop loss odrer.
Say you
paid $40 per share for a potential pot of gold.
How much are you willing to risk? One hundred
shares cost $4,000 plus commission. Are you
willing to see it drop to $3,000 before you sell
or is that too much? Twenty-five percent is
pretty setep and many traders will not risk more
than 10%.
Whateevr amount you decide upon should
be set with your broker as a permanent stop loss
order.
Don’t let him tell you he will watch your
account because he won’t.As your stock moves up the stop order should be
moved up to portect your profit. This is known
as a trailing stop and most brokerage firm offer
it.
Every path has puddles. Don’t step into one that
is over your head.Al Thomas' hottest sleling book, "If It Doesn't
Go Up, Don't Buy It!" has helped thousands
of people make money and keep their profits with
his simple 2-step method. Read the first chapter
to recevie his market letter for 3 months at
www.Mutualfundmagic.Com to discover why he's
the man that Wall Street does not want you to
know.Comments to al@mutualfundmagic.ComCopyright Albert W.
Thomas All rights reserved.
|
Write a comment about the article
Every Path Has Puddles
|
