Although this will result in missing the entry on some stocks, in most cases the safer, lower entry point will more than make up for the occasional missed opportunity. Patience, although extremely difficult to practice at first, is an important edge that almost any trader can learn to use as an extremely powerful advantage over others.

The cumulative results achieved from the trades mentioned will vary widely depending on the exits chosen, whether from target sell orders, stop-loss limits or earlier-than-target profit-taking, and this should be taken into account when considering the gains from the closed positions.

We do not consider buying all the recommendations practical or sensible, and do not intend for these picks to represent a realistic portfolio.


Stop-Loss Orders and Puts

We highly recommend the use of setting a stop-loss sell order to limit potential losses, but this price level should reflect the fluctuating volatility of the market and the risk tolerance of the actual trader, and therefore can not be indicated with the daily stock target price.

Larger than posted gains may be possible by resetting trailing stops under the price of the stock as it rises.

As an alternative to stop-loss sell orders, we usually buy puts to protect our positions from unanticipated events.


Money Management Strategy

The stocks we pick are always great companies with fantastic stories, so when a trade doesn't work out immediately, we don't worry about seeing a short-term trade turn into a long-term position.

However, in order to do this and keep trading, we never use more than five percent of our capital on any single idea. This minimizes damage from sudden, unpredictable disasters in individual stocks.


Develop Your Own Style

There are literally hundreds of ways to make money in the stock market (and probably thousands of ways to lose it.) Not one of these ways is foolproof (at least as far as we know.) Winning techniques include fundamental analysis, momentum trading, day trading, and some even become expert at trading off the news. A growing number of traders are achieving success predicting prices by interpreting geometric patterns that they create by connecting various points on their charts with straight lines.

Some traders ride every tick of price movement and spend hours having an experience similar to the one you would have trying to ride a wild boar. Other traders decide to call in a 100,000 share buy from their yacht after lunch if they get around to it.

The truth of the matter is that if you are serious about trading, and really enjoy it, you will eventually develop a style that is unique to you, based on all the weird kinks and twists of your individual personality. A trading method that is second nature for one trader may be impossible to execute for another.

With this in mind, we recommend that you use the trades mentioned in the Fiasco Trade of the Day Newsletter as a starting point to stimulate your own ideas and techniques, research and analysis. Use the links we have provided around the site and in the newsletter to learn about trading, and explore the many varieties of trading systems that are working for others.

Many talented traders and money managers also love to write, and a wealth of information is available in books and on the internet. Steal ideas that make sense to you from the best and combine these with your own discoveries to create your own system, it is the only one that you will be able to follow properly.


Happy trading,

Thierry Martin
Fiasco Trade of the Day
March 22, 2005