April 20, 2007
Stock Du Jour (EBAY) & Random Observations
Tough day again — OK morning but then selling hit in the afternoon and by around 2:30 things were officially ugly. Healthcare (XLV) and Big Pharma (PPH) again at new highs … Schering-Plough (SGP) especially strong with Lilly (LLY) close behind.
EBAY reported earnings after the close on Wednesday and it looks like the initial reaction as it spiked above $36.50 in after-hours trading was exactly wrong.
AVNR was active again, no doubt trapping all the folks who blindly buy the previous day’s big mover. The worst thing that can happen to a day trader who knows what he’s doing is taking a small, pre-determined loss and moving on. The ability to manage risk is what separates professional speculators from amateur punters.
Cat: | Time: 7:55 am (utc+8)
April 20th, 2007 at 11:24 am
I want to make sure I understand your comment below - the worst is a small loss which is a good. Stay in the game to play another day. This is what you ment? correct? “The worst thing that can happen to a day trader is taking a small, pre-determined loss and moving on — this is what separates the professional speculators from the amateur punters: managing risk”
April 20th, 2007 at 11:37 am
Jeff: Right. There are folks who blindly buy the open (at market) and hope for the best. Professional speculators are extremely careful about quantifying their potential loss *before* they enter a trade. I understand your confusion, I didn’t write that bit very well — let me re-write it now (and probably make it worse). ;-)
April 22nd, 2007 at 2:35 am
In my book, a small pre-determined “loss” is always a “win”.
April 22nd, 2007 at 2:18 pm
Ted: Yes, that’s a useful little mental trick to learn. You can make sure that a sound file plays every time your stop is hit — applause or cheering is effective.