Mastering the Stock Market: High Probability Market Timing and Stock Selection Tools

CHAPTER 10

Putting It All Together Position Sizing, Trade Entry Techniques, Risk Management,Trailing Stops, and Trade Management

I have been asked many times in the past a very simple question, to which I usually respond, “I need more information.” To most this is a very poor answer. The question I'm asked is: “How much money do I need to make?” and usually it's something along the lines of $100,000 dollars or some crazy number like $1 million per year. The truth is, it really does depend on how much money you start with, whether you are leveraging your trades using margin, or power playing a directional move in the markets with bankrolling a deep out-of-the-money option position. The latter is akin to playing a high-limit slot machine; if you time everything right, the return can be incredible.

The reality is, to become successful in trading stocks and exchange-traded funds (ETFs) takes time, money, and a bit of work. The techniques and tools discussed in this book are excellent analysis tools that will help you uncover value, from both an under and over perspective.

As I stated before, it takes time and money to become a successful trader and investor, and time is a relative word. Ten or more years ago, investors were trained to use the “buy-and-hold” approach. As we have discovered in the past 12 years, a buy-and-hold strategy has only worked for a few companies. A few that come to mind are Ralph Lauren (RL), Apple (AAPL), International Business Machines (IBM), Priceline (PCLN), ...