查看完整版本: Cutting win or loss like a professional trader!

Cutting win or loss like a professional trader!

[size=4]I'm trying to act professionally as a serious individual investor, so let me share my cut-loss/cut-win practices and experiences,,, [about 1 in 4 or 5 times my initial investment turns red, and 1/10 time to cut-loss and 2/3 times to cut win],,,

[color=Blue]
1. If there is no extra bad news and the stocks have low p/e and low p/b, I almost never cut-loss, sometimes I even overweight and average on stock like HSBC below 140, or 480 with 5 p/e, .6-.7 p/b 6 months ago when I recommended it,,,[/color]
(A great teaching from Peter Lynch,,, of course, very cautious value-investors like Buffett will always leave a very safe margin for the stocks they purchase, let say 10% safety zone even with conservative estimate of discounted cash flow)


[color=Purple]
2. If the stocks are hot frying stuff, 100% discipline in cutting loss [same as warrants],,, [/color]
(any speculation and high risk activities must set clear cut-loss level)


[color=Blue]3. If unexpected bad news or result were announced, better keep +90% discipline to cut-loss... unless the price drops far below the cut-loss level and was fully reflecting those bad news,,, [/color]
(with sudden drop we may look for technical rebound to cut-loss)

[color=Purple]
4. If the overall market turns bad with bearish trend,,, cut-weight on all stocks and just keep a few defensive ones with decent p/e and p/b,,, [/color]
(bearish market must cut-loss after a rebound or before another diving)

[color=blue]
5. NEVER turn your decent profit into loss, so before all your profit disappears, better cut-win first (e.g in case your profit is dropping from 15 % to 10%, set a cut-loss price at 5-7% corresponding to the profit you are expecting) [/color]
(The best suggestion from the greatest stock gambler, Jesse Livermere)

[color=Red]Brothers/sisters here please feel free to make any comment or recommendation[/color][/size]

[[i] 本帖最後由 小花至愛 於 2007-4-30 01:00 編輯 [/i]]

Thanks for your sharing

[quote]原帖由 [i]cyberken[/i] 於 2007-4-29 20:29 發表
Thanks for your sharing [/quote]

my pleasure brother,

I think at the current +20500 level, there are still good chances for going up further [let say +23000], but also great probability for 10-20% correction [let say down to 18xxx - 16xxx level],,,

Professional practices in cutting win/loss is a must at the current index level...

Personally my cut-loss level is usually 5-20% for stocks and 15-30% for warrants and other derivatives,,,

Good practices for cutting win are even more complicated matters, perhaps more about them [particularly my numerous faults] later,,,

[[i] 本帖最後由 小花至愛 於 2007-4-30 01:17 編輯 [/i]]

Recently I cut win on 480, taking +40% profit, and on 903 for +15% profit,,,

2 days later, I planned on to collect both of them after a 3 - 4% adjustment, but because of some of my capital was locked up in the lastest IPO, I could only collected one of them,,, I finally chose 903 for its dividend, but turned out 903 dropped about 4% [probably because of a big stock transfer news] from my latest purchase and 480 went up another 4%....

The lesson is: Riding on stock wave is never easy and there is always a luck factor,,,,