Money Management 101
I often get email inquiring about money management and why it is so important
to take partial profits off the table. The simple answer is that it can make the
difference between being a profitable trader and being a losing one.
6-21-2002
10:22:35
eBay (EBAY)
is pulling back from its recent high. EBAY is currently down 0.16 to 60.25
and is holding a
3-month relative strength rank of 83 from TradingMarkets.com.
eBay takes off after taking out the June 21 high.
At the intraday high of June 24, the trade has nearly 3 points
of profit on paper. At this point, if you are able to keep track of it intraday,
you should sell half the position and move the stop to your fill price, insuring
at least a breakeven scenario on the second portion of the trade.
The following day the stop is hit, and the trade is a small
profit as opposed to watching all of the gains evaporate. This is a difficult
market to trade, and if you are not doing this now, start. The name of the game
is survival, and if you learn to protect profits and get out of your own way,
the winners will take care of themselves.
Until tomorrow,