Friday, April 30, 2004
Dang it! Well, good news and bad news.
Good news: I executed my first stop order today.
Bad news: I executed my first stop order today.
I owned shares of Marvel, but I also had a stop order. This means that I told my broker that if the price goes below $18.90 a share. Then to sell it.
The idea is that I can say. I won't lose more than X% on this stock. If it goes below X% then I will sell it. As a matter of fact the best thing about this is that I don't spend all day sitting watching the market and stressing myself out.
Believe me. There have been many a day where I just watched the market for six or seven hours. It's as addictive as gambling, and without stop orders, it was gambling.
You make a decision and stick with it. Sure Marvel may go back up, but it may also go down even more. (I think it will.) The nice thing about stop orders is that you may also lock in gains.
Say I buy a XYZ at 10 dollars and the price goes up to 12 dollars. When I bought XYZ I placed a stop order at 9 dollars to limit my loss, but now I move XYZ to 11 dollars. That way if XYZ goes back to 10 dollars or below, I don't ride my profit until it disappears. I may not have gotten my two dollars a share, but I did get my one dollar. If the price goes up higher, then I just move my stop order, higher.
Now the problem with this is that there is also something called a stop loss order. This says that if the price drops at all then my broker will sell. I won't ride out small dips, which I think is a little silly. Stocks fluctuate all the time. I'm not an expert and can't say when they are going to shoot up full steam. (Heck, I'm not even sure when they will shoot up.) To think that they wouldn't shake a bit on the way up is just silly.
Remember on 9/11 when the stock market crashed over the course of three days? Click here for a chart. This is what likely caused it. There was a little sell off and then Boom! We lose 20% of the stock market.
As a matter of fact the market has a tendency to over react to the negative side. If you will notice there are couple of more steep drops like that in the second half of 2002. This is why the recovery takes much longer than the drop. The old saying is, "The bull goes up the steps and the bear goes out the window." If you'd like to learn more about it then check out some books. I particularly enjoyed Stikky Stock Charts: Learn How to Manage Your Stocks -- In an Hour or Less. Of course, it won't show you what MACD is, but it's a nice book to start out with.
Marvel's closing price? $18.99 My prediction? Down.
This is not advice in any way. You must do your own research. This is in no way an indication that you should buy, short, look at Marvel's stock. I'm not even recommending that you watch their movies. Especially, now that I don't own their stock. Consult your investment advisor before acting on any information. Take that SEC!
Good news: I executed my first stop order today.
Bad news: I executed my first stop order today.
I owned shares of Marvel, but I also had a stop order. This means that I told my broker that if the price goes below $18.90 a share. Then to sell it.
The idea is that I can say. I won't lose more than X% on this stock. If it goes below X% then I will sell it. As a matter of fact the best thing about this is that I don't spend all day sitting watching the market and stressing myself out.
Believe me. There have been many a day where I just watched the market for six or seven hours. It's as addictive as gambling, and without stop orders, it was gambling.
You make a decision and stick with it. Sure Marvel may go back up, but it may also go down even more. (I think it will.) The nice thing about stop orders is that you may also lock in gains.
Say I buy a XYZ at 10 dollars and the price goes up to 12 dollars. When I bought XYZ I placed a stop order at 9 dollars to limit my loss, but now I move XYZ to 11 dollars. That way if XYZ goes back to 10 dollars or below, I don't ride my profit until it disappears. I may not have gotten my two dollars a share, but I did get my one dollar. If the price goes up higher, then I just move my stop order, higher.
Now the problem with this is that there is also something called a stop loss order. This says that if the price drops at all then my broker will sell. I won't ride out small dips, which I think is a little silly. Stocks fluctuate all the time. I'm not an expert and can't say when they are going to shoot up full steam. (Heck, I'm not even sure when they will shoot up.) To think that they wouldn't shake a bit on the way up is just silly.
Remember on 9/11 when the stock market crashed over the course of three days? Click here for a chart. This is what likely caused it. There was a little sell off and then Boom! We lose 20% of the stock market.
As a matter of fact the market has a tendency to over react to the negative side. If you will notice there are couple of more steep drops like that in the second half of 2002. This is why the recovery takes much longer than the drop. The old saying is, "The bull goes up the steps and the bear goes out the window." If you'd like to learn more about it then check out some books. I particularly enjoyed Stikky Stock Charts: Learn How to Manage Your Stocks -- In an Hour or Less. Of course, it won't show you what MACD is, but it's a nice book to start out with.
Marvel's closing price? $18.99 My prediction? Down.
This is not advice in any way. You must do your own research. This is in no way an indication that you should buy, short, look at Marvel's stock. I'm not even recommending that you watch their movies. Especially, now that I don't own their stock. Consult your investment advisor before acting on any information. Take that SEC!
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