United it fell - sent to subscribers - June 18th, 2002

One thing you should always do - a MUST - is revisit past trades for anything that could be learnt. Sometimes on losing trades this is not easy to do; it became easier for me once it was proved to me how important stop losses are. And in that classic catch 22 situation, was only something I learnt upon a study of past losers.

Stop losses taken are not considered losing trades by me anymore; they're winners most of the time really, keeping trading capital intact for the next big break I know I will get sometime. (And I can tell you with some experience, in your trading career, stop losses will likely be the hardest thing you ever have to master.) Taking stops is simply something that cannot be taught. And EVERY profitable trader comes to learn it eventually; take your stops.

UAL is one trade I took immediately after nine eleven. I did break one of my rules there, buying an airline stock (I avoid stocks that have to defy gravity continually) however it just looked way oversold, opening as it did afterwards with all possible bad news (at this time) priced in.

I bring up this example because it highlights not only stops, but also one should never be in a rush to buy; stocks being dumped like that have to take time to accumulate, why not just let that happen, then go with the break?

Anyway, I knew as soon as I bought it I was too early. Why do I do these things? And why not just get out the next day with little damage done ?

(united airlines.gif not attached presently)

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