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Vijay Bhambwani's page - updated monthly |
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A traders dilemma - Nov 15, 2003 The recent upheaval in the stock markets has brought out a question that we have all been confining to the closet so far - what do we do when the markets reverse ?? This is a question that nags us when we do our mental maths in the night before going to bed - computing our notional profits in a bull market and feeling a sense of warmth at the possibility of money in the bank. A possibility. Not yet realised profits, because the profits are not yet booked, every fall, every day of negative market breadth is brushed aside as a correction. We comfort ourselves that the markets will rise again. Your broker calls you every alternate day for margin calls and mark-to-market losses. Your start to worry and keep footing the bills. By now the position is yielding you almost no profits. Should you sell out ? You debate with yourself in the night, toss and turn and decide to bale out of the position first thing in the morning. The days trading figures seem weak, the markets have softened again and the market breadth shows a negative sentiment for the third day in a row. You want to exit that stock !!! Your rush to the brokers office in the morning and the morning only to witness the markets opening down with a bang ! Your trade is out of money and you are losing a small fortune where you were having a neat profit only a fortnight ago !! You realise too late that stop losses were ignored, trading rules were flouted and financial management was lax !!!
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