STOP LOSS ORDER METHODSWritten by Al Thomas
THE ALCHEMIST by AL THOMAS STOP LOSS ORDER METHODS We have established why a stop loss order is a requirement for successful investor. Now let’s look at some of simpler methods. There are 3 basic methods (and many more we will not discuss here) for stops that almost anyone can master. They are percentages of price action, moving averages and support areas. These cannot be covered in detail here, but you can do further research on your own. Any stock, fund or Exchange Traded Fund (ETF) you buy you think is going to go up, but there is chance that it may go in theother direction. The stock you buy is $50 per share. You certainly don’t want to hold it while it goes to $25 or $10 as many did in 2000. Your first thought should be how much am I willing to risk if I am wrong and that is called your loss limit. Let’s pick an arbitrary amount of $5.00 per share. That’s 10%. If it goes down that is maximum amount you will lose and you still have 90% of your money remaining to find a better investment. When it goes up you will want to protect your profit by moving stop up. When an equity advances to $55.00 your stop of 10% should be moved to $49.50 that is 10% of $55. When it goes to $60 your stop is now $54. Nothing complicated here. There have been many stocks that gone from $20 to $250 and then down to $2.00. Think what a stop loss would have done for you in that case. As I have said before never buy anything unless it is going up. That same $50 stock was moving steadily higher in a rather narrow trading range. If you decide to use a 20
| | Beat the House with this Supa Blackjack StrategyWritten by Kent Clarke
In game of blackjack, final hand you hold can only be one of following - a blackjack, 21, 20, 19, 18, 17, 16 or less, or bust. If you bust, you have lost, whereas if you hold blackjack worse case scenario is a tie with dealer with best case scenario being you get paid a bonus of 1.5 times your stake. You probably realize that chances of winning if you stand on your 17 - 21 are very important, so what are they? Not as good as you might like!Here's an example stand on 17 in a 6 deck game (the dealer must stand on 17). You are probaqly thinking that's a good hand and are happy to happy to have 17. The statistics prove though, that you will lose more often than win if dealer shows any face card except a 6. The most money is lost in this scenario when dealer shows a 9, least when dealer shows a 4 or a 5. Make a mental note - you only stand a fighting chance when dealer has a 6 showing. Only in THIS case will you have a statistical chance of winning money in long run. You will now be wondering how you can make money, given these facts. You can't. If you hit a hard 17 you will expreience mounting losses, so wise course of action is simply to stand. Of course, often you can stand on 17 and still win a hand but numbers add up inexorably - over time you will end up losing more money than you win UNLESS dealer shows a 6. Standing on 17 is not a good idea! Now you know that 17 is actually not a good hand, you have probably already realized you should never stand on soft 17 (instead you should either hit or double down). There is a further disadvantage too, when dealer hits soft 17, as follows. Imagine you stand with 18. This has GOT to be better than standing on 17, right? Yes, but improvement in your odds might surprise you. With an 18, and over long run you are going to make money when dealer shows a 2 to 8 face card. You will still actually LOSE money when dealer's showing a 9, 10 or Ace. For this reason you should never stand, but should always hit a soft 18 if dealer shows a 9, 10, or Ace. Statistical 'Monte Carlo' analysis of Black Jack by www.supabets.com has revealed that in imaginary case of you ALWAYS having a hand of 18, surprising fact is that you would LOSE an average of about 65 cents for every $100 you bet. 18 ain't such a great hand! Human psycology is what makes us think opposite - 18 is 'nearly 19', and 19, or course, is 'nearly 20'. An 18, in subconscious mind, is therefore 'nearly 21'!! What about 19? Can we regularly stand on 19 and win money in long run? 19 MUST be a winning hand! The answer is... Yes, except if dealer shows a 10 or Ace. If that is case, your 19 will still cause you to lose money in long run. Hard to believe, huh? When you get up to 20 you are basically in money. This hand will make you money in long run whatever dealer holds, even including an Ace. As 20 is such a phenomenally strong hand, NEVER split it 10 10 (and likewise an Ace 9 should never be doubled). It's a winning hand - and if it ain't broke, don't fix it!
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