Decision Making -- By: Bill Kraft
Copyright 2009, Makin' Hay, Inc., All Rights Reserved
Bill Kraft
Editor |
When we trade we need to make many decisions. What stock will I
choose? What strategy will I use? When will I enter? Am I bullish or
bearish? What is my exit strategy? Will I set a stop to buy? Will I
set a stop loss once I have entered? What reward to risk do I seek to
attain with the trade? Will I bother to create a trading plan? These
are just a few of the decisions we must make as traders.
As I have often said and occasionally written, one of the best
pieces of advice I ever got was from a colleague regarding decision
making. We were talking about the difficulty so many people have
making decisions and my friend said that it is often more important to
make the decision than what the decision actually is. "Naturally," he
said, "the decision may be wrong, but then all we have to do is make
another decision and fix it." So often, I have seen traders (and
other people) absolutely agonize over making a decision. They try to
gather every fact relevant to the decision and then worry over it for
prolonged lengths of time only to find once they have finally made the
decision that some fact changes immediately after they have decided
and it makes the decision wrong or inappropriate.
Should I buy XYZ? It was going up, but it just took a dip.
Earnings have been good, but the next earnings are set to be released
in a month. I like the CEO, but there is a rumor he might be leaving.
Their product is super, but rumor has it that the ABC company might
be releasing an improved product in the next six months. There is
almost always a "but" in any analysis we make. We simply can't know
what a stock or the market will do tomorrow.
The only time we can make a decision is now. As Dr. Ari Kiev
wrote in "Trading to Win" (John Wiley & Sons, 1998), "Waiting for the
right answer before you act is a trap. You may think you are doing
something when you are deciding on the right way to go or the right
path to follow, when in fact you actually are mired in your own
thinking. The issue is to choose or not to choose, not choose the
right answer."
If we buy a stock, for example, we can be right or wrong. The
issue for us is to decide what to do when we see we are wrong or when
we see we have been right. In my view, that is what an exit strategy
is all about. If we are wrong, we should get out, that is what cutting
losses is all about. If we are right, we should stay in until the play
turns against us. That is how we let profits run. In either event,
we need to make the decision now.
Good Trading!
Bill Kraft
Success Trading Group -- by the Success Trading Group Team
Our Success Trading service delivers quality trading ideas for the elite investor that has the financial wherewithal and market nimbleness to profit on small moves in a stock's price. Become a member and you will be provided with email and/or PDA alerts intended to provide you with the opportunity to make many, many profitable trades.
Here is a play from the Success Trading Group:
Wal-Mart Stores Inc. (WMT)
Our Success Trading Group members purchased Wal-Mart (Ticker: WMT) this
week. We like WMT at its current price for new positions.
Have a great weekend and we'll trade next week.
Success Trading Group Team
Trade Quality
Stocks Over and Over Again
Over 320 winning trades and only 9 losses!
Register Now
and Get $50 off our Normal Website Rate
Option Trader -- by Bill Kraft
Our Option Trading Service is for conservative traders that understand leverage principles and enjoy the challenge of options trading. We focus on powerful option trading strategies that place volatility and momentum in your favor. And we pride ourselves on always minimizing our losses!
The Option Trader service utilizes standard trading in Puts and Calls as well as strategies using Leaps, Straddles, Credit Spreads, Calendar Spreads, and Naked Puts. But no matter how sophisticated a strategy may be, we ALWAYS know our downside potential on every trade.
Here's a look at a trade Bill is currently working on:
NetApp, Inc. (NTAP)
NTAP has been trading in an uptrending channel since the
November low. I am looking at the Jan 2011 in the money LEAPS calls
for a possible entry on a bounce off the lower boundary of the channel.
Good Trading!
Bill Kraft
Try our Option Trader Real-Time Alert Service
and Get $50 off our Normal Website Rate!
Achieve returns with us like
16.48% return in 5 days!
Trend Trader -- by Bill Kraft
Trend trading as we try to practice it is a form of momentum trading. We prefer to try to capture profit out of the middle of the trend rather than try to catch reversal at bottoms and tops.
Here's a look at a trade Bill is currently working on:
Thoratec Corp. (THOR)
This stock was one of two that Trend Trader closed this
week, both for a nice profit. THOR realized a $1.33 a share gain in a
week. Following my exit, it fell to support and may soon offer another
entry. The other winner, NRP, landed a 4.8% gain in just under two
weeks and has since drifted down off resistance. It, too, remains on
the radar as a potential entry on a break above that resistance level.
Good Trading!
Bill Kraft
Try our Trend Trader Real-Time Alert Service
and Get $50 off our Normal Website Rate!
$10 Trader -- by Bill Kraft
We really enjoy trading stocks that are $10 and under. Often they provide the chance to enjoy high percentage gains and, of course, at worst, the risk is limited to what we paid for the stock.
Here's a look at a trade Bill is currently working on:
Cresud Inc. (CRESY)
CRESY returned to the uptrend after a seemingly reasonable
retracement. MACD turned positive Thursday and I am looking for a
possible entry either on a bounce off the trend line or a break above
the $9 resistance level.
Good Trading!
Bill Kraft
Try our Under $10 Trader Real-Time Alert Service!
Dividend Investor -- by the Dividend Investor Team
Our Dividend Investor service focuses solely on the "best of the best" dividend paying stocks. We attempt to buy these stocks for their powerful dividend producing income; and we will also buy these with a purpose to make capital gains as the stock increases in value. Our Dividend Investor service is a perfect fit for an IRA account.
Register Now
and Get $50 off our Normal Website Rate
