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Hi All:
I'm new at Realtraders, and I really appreciate reading a lot of the posts
here, which help me a great deal in my trading/investment.
Nick says it right.
Actually, one of my stock brokers taught me exactly the same thing back in
1979-80: sell half when you have 100% profit (that covers your cost); the
remainder is pure profit.
Robert Lichello wrote a book called "How to Make $1,000,000 in the Stock
Market Automatically!" The one I have is a Signet paperback edition,
costing $6 (US), which I bought at least 3 years ago.
(There was also another book published by the Self-Counsel Series (Cdn
publisher) at least 15 years ago by a certain Doctor xxx (? - forget his
name) called "The Money Spinner".
Both authors use different formulae. But their strategies are similar:
Buy (some shares) low, be prepared to average down, and sell (some shares)
high, be prepar to sell more at higher prices.
You can visit the AIM (="Automatical Investment Management") website at:
"http://www.execpc.com/~oldcat/index.htm";.
Though I don't follow Lichello's formulae 100%, I rely on his strategy
heavily.
I've also considered using the Martingale (gambling) system in trading
stock options. I actually did some trades based very loosely on this
system, some with absolutely disastrous results, but some with fantastic
returns. (MS in a nutshell: bet 1; lose; bet 2; lose; bet 4; lose; bet 8;
lose; bet 16; lose; bet 32; lose; bet 64.... if you win the last time, you
kind of break-even. Of course a serious defect is you don't have enough
capital to double (or tripple, quartriple <using a variation of the MS>) up
indefinitely.
My very unscientific conclusion at this moment is that the MS may work if
you've chosen a good stock (like IBM, INTC) when for some reason the stock
has been sharply down recently. At certain point when your indicators tell
you to buy (usually when bottoming-out), you start your first call
purchases. To be really safe, better stick to leaps with at least 1 1/2
years before expiry. (This way if you're wrong and average down, you still
may have a fighting chance.) Also, the most important factor is DO IT IN A
BULL MARKET, and forget about this strategy in a bear market. (But then
we're never sure when the bull market ends until afterwards...)
The same caution applies to AIM if you're using it to trade calls.
Regards,
Wong
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At 08:31 PM 11/17/99 -0500, rick nolte wrote:
>... I like the "free trade" approach, selling half my position on a 100%
gain, thus
>holding the other half with no basis. Kind of like trading into an
>investment . Works well in the current bull market for me.Incidently, I
>look at weekly charts on stocks for various technical signals.
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