Forum Archive Index - June 2001

[J & E Fraser <jefraser@ihug.co.nz>]

Hi Phaedrus
trading Nasdaq stocks I look at volatility to determine which is the
better risk management tool...stops or options. If the volatilty is low
or heading higher,  I'll consider picking up 'cheap' puts to cover a
position and just go with those or use stops as well at much lower
levels..after looking at chart.
When you consider that most are supposedly risk averse and that managing
risk is one area that you do have some control over, it's surprising few
use the tools out there.
I dont use stops when every bone in my body says this stock is going
dat-away, then in doesnt!(daytrades that is).  Then I sell immediately,
cause I'm wrong and the goal is then loss prevention, nothing else.
Also, stops stay in my head. Ive seen market makers take out stops
before. No need to show them. And if you set a stop and the stock gaps
down next morning, theres a good chance your stop wont trigger anyway.
Most gap downs will bounce..thats the sell point.

Enjoyed your defence of charts. To me, understanding market psychology
is a real advantage in this game. Charts are a record of not only prices
etc but human behaviour...responses to news, events etc.
cheers
jesse


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