Our covered call play (CROX) is slightly negative. We bought 500 shares of CROX and sold 5 September $12.50 calls. This is called a “covered call” because we own the stock we are writing the calls against. A “call” gives the purchaser the right, but not the obligation, to buy our CROX shares anytime [...]
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How you exit a trade is as important, if not more important, than how you enter it. This may seem odd, but if you think about it, if controlling your risk to small, predetermined amounts is the key to successful trading and investing then that, by definition, tells you how important the exit is.
Your trading [...]
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When Wall Street’s darling growth stocks start reversing course, they become beaten-up value stocks. Growth-stock investors have no patience for companies that fail to meet inflated earnings expectations and value investors are too timid to step up and buy for fear of getting into a declining situation too soon.
When the former stars of Wall Street [...]
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Always use protective stops! This is an absolutely imperative action you must take! It is also the way to limit our risk as per Part 2 of this discussion. Once you’ve defined your 2% risk in terms of your account equity, always place a protective sell stop to get out of that trade at a [...]
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Posted in Trading Ideas on May 6th, 2008 No Comments »
Never risk more than 2% of your account equity on any one investment, trade, or recommendation.
Make this a “golden rule” for any trading you do on your own. The only exceptions to this would be long-term core positions where you are not using any kind of leverage or margin.
However, for short-term investing like day-trading or [...]
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Tuesday, April 29, CXZ hit our sell stop of $0.69 and we were sold out at that price. Uranium stocks are in a long downtrend due to uranium prices dropping from almost $150.00/pound last year to $65.00/pound today.
We have a rule that says if we are stopped out of a stock we cannot buy it [...]
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