tag:blogger.com,1999:blog-35316766.post2519964860091952086..comments2023-11-03T09:17:54.879-04:00Comments on The Perplexed Investor: PM postLeisa♠http://www.blogger.com/profile/10237875938400587600noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-35316766.post-29216849688350222782008-07-17T20:32:00.000-04:002008-07-17T20:32:00.000-04:00Nice--thank you for this exposition. I've been di...Nice--thank you for this exposition. I've been disciplining myself to average up using 1/3 tranches. I've completely reversed my averaging down proclivities. Though I can say that I've only done so when I thought there was a knee jerk reaction. <BR/><BR/>I've had good success in selling on exponential up moves--SEED was my best trade last year. My last 1/3 came withing a sneeze of the top-tick. That move fit the too far too fast. It has never seen that level.<BR/><BR/>Sometimes the best move is the hardest move (sell when you think it will go on forever and buy when you think that bottom of the barrel swill will pollute your taking a ladle full).<BR/><BR/>The UYG was like nothing I've seen in my short time as an observer. I only wished I had the fortitude to have stepped into the trade a little less tentatively. I've a post on that percolating--the "vanguard of the moment".Leisa♠https://www.blogger.com/profile/10237875938400587600noreply@blogger.comtag:blogger.com,1999:blog-35316766.post-40238316148417462802008-07-17T20:01:00.000-04:002008-07-17T20:01:00.000-04:00Congrats on the 'nice' gain with UYG Leisa...In on...Congrats on the 'nice' gain with UYG Leisa...<BR/><BR/>In one of your previous posts you were pondering 'how does one know when to sell' and discussing things like 'averaging down' etc...<BR/><BR/>fwiw:<BR/><BR/>IMHO I like to keep money management simple....<BR/><BR/>I accept the fact that I cannot 'Know' when to sell<BR/><BR/>I accept I can't call the top (short-term, intermediate term or definitely long term)<BR/><BR/><BR/>... So, borrowing a simple money management technique that leveraged futures traders use:<BR/><BR/>I find it best to sell out a profitable trade/investment in 3 stages.<BR/><BR/>(1) A "Trading Portion"<BR/>Sell 1/3rd when the trade goes positive with a respectable gain (especially in a case like UYG where we got 10-20% in a short period) <BR/>Having sold 1/3 profitably - now even if the entire position reverses itself - at least you will have made some money.<BR/><BR/>(2) A Swing - 'The Meat':<BR/>Sell the 2nd 1/3 when some predefined target you set gets hit (trailing it with a large stop).<BR/>This is the 'meat' of the trade/investment.<BR/><BR/>(3) 'Let the Rest Ride':<BR/>Let the last 1/3 of the position ride until it makes obscene Activedollars.. <BR/>(or returns back to where you bought it). <BR/>After all - There is no limit to how high something will go.<BR/><BR/>...<BR/><BR/>As far as averaging down - I prefer averaging up.<BR/><BR/>Add to what is working as opposed to pressing a bet which is not.<BR/><BR/>As a caveat though, <BR/>Averaging down can work in very volatile 'trading markets' like we have today - ones which trend much less and eventually will gyrate back up into the green.<BR/><BR/>Essentially the volatility compensates for the bad entries.<BR/><BR/>But I still say averaging up is better - hands down.<BR/><BR/>niceAnonymousnoreply@blogger.com