Technical Analysis for Direct Access Trading [PDF]

Summary
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Technical Analysis for Direct Access Trading – Book

If an investor is holding stock, I am assuming that small investors do not normally short stocks, at least in the beginning. Later on, I am sure some do, but most people who have spoken to me look to buy, not to sell short. Some do not even know this option exists. Anyway, if we are assuming that the person is holding a long position, the individual should keep in mind his or her investment objectives, and let them ride.

Usually, people think that if the stock is going up, they can pick out where the top of the market is. This is nonsense. It is better to sit on it and watch it go up. If it falls back some, then so be it. Like I said before, selling at market tops is a difficult, if not impossible, task. Small investors should be trying to win the war, not the battle.

If you are constantly looking to get out when the market falls back a small amount, you are going to take it from the commissions that you pay to get in and out of the stock. Letting profits ride is important for small investors. Equally important, however, is cutting losses. I know, this sounds completely contradictory given what I just said. This is the big question in the market game