So easy.
I was a little worried you weren't going to use stops, becoming another wxy.
If you use stop losses then you are essentially gambling
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I was a little worried you weren't going to use stops, becoming another wxy.
In all fairness to @wxytrader, I re-read the OP and it makes sense for investors not afraid to hold the underlying for long term instead of trading in and out.
I looked back into my own record and realized I missed a great opportunity to own META at a very good price because I bought it @ $24 a share back in 2012, followed O'Neil's strategy, put a stop @ $22 (-8%). Of course I got stopped out. Would have been a great investment (28% CAGR) instead of a loss.
Woulda. Coulda, Shoulda.
What stopped you from getting back in?
Too upset about been stopped out, kept waiting for a pullback to near $25 which it never did.
First time practice of the O'Neil's 8% rule.
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And unlike MSFT which I didn't put a stop and kept it till now at approximately the same cost base.
Of course all of my 2000 era dotcom stocks without a stop all went to zero.
You win some and lose some. No right answer except we cannot say @wxytrader is wrong.
What is the rule?
Take 8% loss and then? Invest again at your original level? Or abandon the stock altogether?
He wrote a book with a bunch of rules, I forgot what else, only remember that every trade should have a -8% rule to get out, so I put a stop on every trade I made that year, most got stopped out. Probably misapplied his rule (bad stock picks).
Don't think he has a rule to reenter.
To each his own. If it works for you then why change.
It didn't work for me because I couldn't stomach the drawdowns.
My number one priority is capital preservation.
My risk control is getting out of the market when it turns down.
He is. Dead wrong. He doesn't believe in diversification as well but besides that cutting losses and jumping back in beats doubling since we never know if what drops will, with 100% certainty, rise again in our lifetime.
Even the vaunted S&P. Believe otherwise just look to Japan's Nikkei or how long either a) 1920-30's Dow to come back or b) Nasdaq 2000