CHAPTER 8TEN RULES TO PROTECT YOUR CAPITAL

Hope Knot buys 1000 shares of Buy.com at $20. It immediately drops to $19½, and naturally, Hope begins to doubt the wisdom of her trade. But hey, Hope also knows Buy.com has a great future. It’s been steadily moving up all year, and the Internet is as hot as a firecracker. Moreover, every single one of Buy.com’s technical indicators is pointing as straight up as a Titan rocket. So the market must be wrong—not her. So Hope sits on the stock and on her loss another day and waits for the market to come to its senses.

The next day Buy.com sags down to $18. This is where it really begins to hurt. Hope knows she has skidded past the point where all of those trading gurus will tell you to exit a trade—with ...

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