Buy Low Sell High...

If only it were that easy.

I keep scouring the internet for new information or even a twist on something old...which is most of what is happening anyway.

I was reading an article that re-hashed the same thing that everyone says and everyone thinks it is their idea. I suppose even I am prone to this as here I am writing about it. The difference is this is more a blog than any information providing service.

Three trading "secrets"

1) make a plan and stick to it
2) cut your losers short
3) let your winners run

WHEW! now I know all there is to know about being successful in trading.

Now, I've only been at this for ...close to a two years now and those were probably the first "Rules of Trading" that I ran across. They do make perfect sense.

This is a timely bit of self talk for me today as my positions are doing quite well, nothing too huge, just quite well. My trades are all between -1.6% and +30% on paper right now and the overall average is 8.5%. Not bad for a couple of weeks playing.

Where the timing comes in here is that I was over 10% midday and I considered closing all of my trades just to take the profits. Now some of those great positions are eroding, just a bit, but it adds up.

So, I cut a loser Friday. Now I have to decide how much room to give my winners and I find this harder to do than picking an entry point. Entries are easy now... I have a selection of stocks and options to choose from and most of them seem to cycle enough that I do not have to drop any for others now, especially with the options trading allowing me to spend less per trade. The options take a bit more figuring for the opportune entry price but once it's on it's on.

Now my plan is to develop some sort of exit strategy based on rigid rules so I do not have to wallow in the "sell now or hold" limbo land. I should have set this up already, I know, but I got caught up in the buying frenzy.

Seeing as I only have one small loser now, it seems more important to determine how much leeway I need to allow for the winners to run.

Actually, having said that, August is a typically a seasonal peak so I have tightened up my stops to allow me to exit pretty much everything in the green at least... some have some decent profits even at the stops so I cannot complain. I am considering percentage target exits with ratcheted stops given certain price targets.

My long straddle is interesting but not going anywhere quickly. The put is appreciating and the call is depreciating. I started by being down about 25 cents between the two now I am even on the put and down 25 cents on the call. Until the CAH price starts to move I am not likely to see the varied non-linear effect kick in...perhaps once it gets $1 away.

Jeff.