Friday, October 24, 2008

Stops Are Good

I know I have complained the past few days because I have been quickly stopped out of virtually every trade I have put on, usually to see the position go the way I thought it would after getting stopped out. However, when I see a morning like we are likely to have today, it reminds me of how important using stops is in trading. I have nothing to complain about today. Being 100% in cash means I can sit back and not have to stress about this market. Sure, I have lost a little bit recently trying to trade this volatility, but I can't complain when I think of what is going on with IRAs and 401K accounts across this country. It is very sad.

I have never seen a "limit down" open in my trading career and it doesn't look good. Good luck if you have positions on today - shorts or longs. I would imagine spreads will be all over the place and getting good fills will be difficult. I will not be trading at all today - no point in messing with this. I guess it goes to show you the old trading axiom of "a market can go as high as it wants to go and as low as it wants to go" certainly holds true. Be careful right now and again, let's hope that somehow our country can pull through this crisis and be better for it. I think historybooks will show that what we are living through right now will be one of if not the most challenging economic crisis we have ever gone through. I hope those same history books show we got through it. Take care.

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