Monday, May 18, 2015
Sell the losers
Jesse Livermore. How to Trade in Stocks.
Jesse Livermore : page 106
The one thing I learned in my many years of playing the stock market is that there are always opportunities in the market, so to remain with your cash in a stand-by position meant that your money, your inventory, was inactive now but this could yield huge benefits in the future, when it was finally committed to that "special situation." Just as it is true that many people will sell their good stocks and keep their losers it is true that they will also keep the stocks that are flat, not doing anything, or going anywhere.
Please beware that this does not mean a stock will not have a normal correction or a normal consolidation in an upward trend...what we are talking about here is a stock that is just wallowing in a trading channel making no progress in either direction is the stock being accumulated or is it being distributed. If it is not clear then it is sometimes best to exit the stock than to take a chance that it is being distributed and will eventually go down and cost you money. Give the stock a little time to show itself in these situations, but waste no time in .wooing out an inconclusive stock and moving on to another trading situation.
"I have often sold a stock that has moved a point or two in my favor, but I simply do not like the weak or limp manner in which the stock is acting. It does not matter to me if I am even, or a have a small profit or a small loss—the facts remain—the stock did not do what I had analyzed and believed that it would do—so the conclusion is always simple to me—my judgment was wrong and I must exit the trade. One thing I know for sure is that my judgment has been wrong in the past and it would be wrong again in the future. The DANGER is in not recognizing it and getting out. The wise are right—pride often does come before a fall.
TEH :I will slowly share Jesse Livermore's writing as I have been trading according to his way ... he was the BEST trader in the world. But, I noticed I have against few of the rules ... and that is when I lose money. I will discuss this during tonight's e-meeting (9.30pm to 9.45pm)
The e-meeting is only for members.
Will write more on it at www.tratles.net