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Frequently Asked Questions

Market Lab Report
Can you both address how you plan in advance how to exit your trades? What happens when money rolls out of most or all of your positions at once?

Q: I can link the start of my "professional" career to September 1, 2010. And I can assure you both I was in no way prepared for what transpired around me. I was buying from the pages of IBD and making money. I think I discovered your book and service only a month or two later. I cringe to think of the stocks I owned then: SLW, NFLX, ARUN, APKT-- all the heavy hitters at fanastic prices. But I was too jittery and uncertain and would jettison for the smallest down move. Only when I started to get comfortable with holding stocks, the market turned over in November. I remember the terrible headache that hit and my deer in the headlights paralysis. Needless to say, all those stocks have gone on to greatness. And as they started their next leg up in December, I put a moratorium on trading and went searching for a holy grail. Luckily, I came to my senses and realized that my paper trading accounts were all top rated, and they were all based on your suggestions (I believe I forwarded one of my paper trade portfolios, which was ranked in the top 20 of several thousand, to Gil, and he approved!). Well, I'm doing well again. I hold AGQ, DGP, ORCL, AZO, SSO, UWM, PAY, LYB, TBT, and REE among others. I watched the pull backs today with calm confidence. My eyes are on the tape and the moving averages and volumes. Having gradually assimilated more of the set ups, concepts, and tools of analysis, I still remain uncertain about how to protect profits should a market rollover sharply . My paralyzing fear has subsided, but an a real anxiety remains-- perhaps asa symptomatic reaction to a real trauma. Can you both address how you plan in advance how to exit your trades? What happens when money rolls out of most or all of your positions at once? Do you fire sell orders manically?...

I doubt panic or paralysis affects either of you. As I'm sure experience plays a big role. I also think you two have solid plans, and I hope you can talk a bit more about them either in the webinars or in your various emails and reports (including the gilmo report).

 

A: We know exactly where we will exit positions so we know the exact % and $ drawdown from where our respective accounts currently stand if the worst were to happen. Knowing we can live with that worst case, we can let our profits run, and hopefully the worst will not happen. And if it does, we know we will live to trade another day.

We utilize various selling strategies which we have discussed here (type in sell stop in keyword search bar): http://www.virtueofselfishinvesting.com/faqs


Published: Apr 7 2011