Another stunning week on the market. Fortune favored the bold once again. However, the snap correction we had on Wednesday - after a sharp rise - showed how quickly things could turn.
Stop losses. When the market is this volatile- you really need to have good stop loss management. Even for investors.
The professional traders set it at 1 to 2%. For the average investor- 5% - is a figure to consider, esp when your shares have gone up 20% - 50%+
You just have to try and remove as much emotion from trading. The buy and hold strategy whilst sounding good on paper- can cause you to miss out on cashing in your profits - which is what the whole business is about. You're here to make money. Remember that! Never fall in love with the stock. If the shares start coming hard down - better cash in your chips - and wait and see.
But anyhow the market rebounded sharply on Thursday and Friday. But it certainly would have hurt if you had bought in on Wednesday.
Here's a author to read - Daryl Guppy - has written several good books on share trading - His style is not share investing but active trading. The difference is that traders follow technical analysis and less on fundamentals.
But in this sort of crazy bull market- fundamentals aren't exactly in play- more like rumor and hype. And its the sort of market that is prone to serious and fast corrections.