- Don’t Play “Catch Up”

Stock Ideas

Investors Daily Edge

Don’t Play “Catch Up”

Stock Ideas

Market Watch

Solar Energy is the largest energy resource in the world today, the emerging energy crisis is pushing the world to look for alternative sources of energy.
More...

Login Form

Don’t Play “Catch Up”

Wednesday, 24 September 2008

By Charles Delvalle
With the rollercoaster ride known as the market virtually coming off the tracks last week, it wouldn’t be too shocking if a lot of people lost money. If you’re among them, you’re certainly not alone.
But the last thing you should do is risk your entire portfolio to try and “catch up” and make up that lost money.

Let’s say you have $10,000 in your account and put the entire amount in each trade:

    - If you make 20% in your first trade now you have $12,000.

    - If you make 30% on your second trade, you’ll have $15,600.

    - If you make another 20% on your third trade, now you’re up to a whopping $18,720.

    - Then on your fourth trade, the company you’ve invested in reports a lawsuit and the stock tanks 80%. Now you’re down to $3,744.

Last time I checked, you can’t make money in the market if you lost most of it on one bad trade. So don’t use more than 20% of your trading capital on any one position.

If you commit 20% of your funds to each position in the example above, your account would be down to $9,630 instead of a wimpy $3,744. Let me show you:

    - On your first trade, you would have made $400

    - On your second trade you would have made $624

    - On your third trade, you would have made $440

    - On your last trade, you would have lost $1,834

Debunking the Dollar’s Doomsday Theory

By Charles DelvalleI don’t believe that the dollar’s decline will cause a “Dark Age” to strike the heart of America. And I don’t think that we will ever need to...
+ Full Story

KEC International Hidden Gem !!

KEC International being a Major player with presence in more than 20 countries, KEC International looks set to reap the benefits, the boom in CAPEX in the Power Sector planed by the...
+ Full Story

By using no more than 20% of your portfolio on each position, you could still take a big loss and have a good chunk of money to trade another day.

We endeavor to decipher analysis of this Teaser/News Letter to distinguish the thoughts of Authors/Editors.
Please post your Review/Comments, your rating helps other users gauge the value of an article ...

This investment news is brought to you by Investor's Daily Edge. Investor's Daily Edge is a free daily investment newsletter that is delivered by email before the market opens. It's published by Fourth Avenue Financial, a subsidiary of Early To Rise (an affiliate company of Agora Publishing). In each weekday issue you'll receive practical strategies for protecting your portfolio and multiplying your money. You'll also learn about undiscovered opportunities in emerging sectors and markets, deeply discounted stocks, recommendations for bonds, cash, commodity and real estate investing, and top ETFs. To view archives or subscribe, visit Investor's Daily Edge .