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Profe$$or

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Profe$$or

Re: None

Saturday, 12/29/2007 12:04:32 AM

Saturday, December 29, 2007 12:04:32 AM

Post# of 137481
If there is one mistake, one incredible sin I've seen new traders consistently make, it's deciding on a stock to play based on price. I understand the urge (believe me) and where it comes from, but it's faulty and should be recognized as such. Limited capital is the main motivator for this urge. Because of limited funds many traders opt for taking the trades in the lower-priced areas. It is my opinion that the odds of winning often increase as you climb the price ladder. Consider this. In order for a $10 stock to move $2, it must rise a whopping 20 percent. That is the type of gain some investors would be delighted to get over the entire year! In fact, over 60 percent of professional fund managers don't even produce annual gains near that, and there are traders out there who want that in one day! Can it happen? You bet. The problem though is that the person with limited funds is the one who desperately needs a higher winning success ratio. Yet if he is consistently playing subbies or cheap stocks, the trader is swinging for the fences in the land of lower probability. Even though the trader buys fewer shares in the higher price ranges, the odds are much better in my opinion.

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