how to follow the market (兼答 threeeyes )

Question: 那到底怎么跟呢?很多人都是上班族. 比如头天晚上或一大早买好股票,象今天这个样子,晚上下班一看已经是损失惨重了. 经常看有人说要跟市场,可市场往往就不让你跟,就在一不注意的时候,来个风云大逆转.:-( 感觉跟市场并不容易啊,有时候别预测还难.我要跟,时常说,我就不让你跟. 

Answer:  place a stop loss order ( under major support area)

Question: that usually doesn't work. stocks always turn around after touch stop loss point. I think many many people have this bad experience. Although maybe we choose wrong stop price every time.:-( . and, Why I need to put stop order if I follow market? I think one only need to put stop loss when they try to predict market? So actually even follow market can not gurantee anything? You still need to put stop loss for a fake or wrong follow?

Answer: why you buy car insurance?

Question: That's totally different. I have no intention to make money to buy a car, it is for surviving in this country, buy insurance is to obey the law and protect loss. However, the only purpose people buy stock is to make money. That not a proper analog at all.


Answer: they are the same idea. If you want to make money, you have to protect yourself first..

It just like you drive a car with purchasing a car insurance to protect yourself from a blow damage to your account.
In June I bought 80 qqqq call with the hope I could hold it and make money(bought a new car and hope to drive it for a long time). I didn't buy the insurance(did NOT place a stop loss order). When it dropped to .90 per share I told myself it is not a big deal it would come back( small damage to my car maybe only a den on the bump.) When it dropped to 0.1 per share I told  myself it was not worth to sell it anymore(the car was totally broke and I had no one to claim the loss). If I had bought the insurance(place a stop loss order at 0.9) I would still have money to buy another car. So the small loss would like you paid the car insurance. After this experience I always place a stop loss order to protect myself. This way I already get back all the loss I had and even more.





I will use GOOG as an example to describe how to follow the market. If you had goog before you should exit here if you are a short term player. For long term holding there is nothing to worry about so far.





1. On 11/14 Goog broke out from the blue line with volume so one should buy some today. I bought today and I had one trade stopped out before this day(bought the call at 8 and sold at 7.7, paid small insurance)




2. Goog followed through the following day even the close was weak. One should hold his position tight. But I sold my call. I still can not strictly follow my rule ( see my post before on this trade) and I will not let this situation happen again. Learn from your own experience.




3. Goog built another small base and $500 was the pivot point. If it could break out from the green line then one should add more to its positon.




4. Sure it broke out the next day. Now the green line became the support line if it breaks down this line. then one should exit at least half of his position




5. With today's terrible market situation and if you follow the market one should exit all his position on GOOG.






Spring(music by Antonio Vivaldi, played by my 5 year daughter)