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Author: RetiredVermonter Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75790  
Subject: On line trading not for neophytes Date: 1/12/2004 11:00 AM
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Some background...

I have never been one to trust blindly handing my money over to some "investment expert" without knowing something about what my money was doing. Over the years, I have therefore spent considerable time learning the ropes about investing -- short term and long term. (I still have a lot to learn!) I started out small, cautiously investing in what "seemed good", and sometimes lost my shirt, so to speak, so I began to do more homework, kept up "trying the water" with small amounts, and gradually started to see improvement.

Jump ahead several years to 2000. I had been retired (prematurely - as in laid off) but was doing reasonably well with investments, enough so that we could even live off what I "make", pretty much, plus some consulting work.

However, I smelled trouble in the wild equities market, so I shifted much of our money to bond funds or money markets -- thankfully! The bond funds did pretty well over the next year or two. By then, I had also rolled over my 401k to a self-directed IRA, but kept maybe 60% of my money in a few diversified bond and equity mutual funds, except for some specific equities that look good to me (still after a lot of homework).

I then tried my hand at doing some day trading -- again, starting small. Thankfully, my Fidelity account allowed me to do so for $14.95 a trade, but that still added up if I was not careful. Again, this is all within my IRA, so I paid NO capital gains taxes on profits, and, now that I am past 59-1/2, I only pay income taxes on whatever I withdraw. At our income level, with deductions, this is sometimes very little.

Now, in 2004, my IRA base is still good mutual funds, plus some equity stocks that I track upward, but I have learned some tricks for finding "hot" trading stocks, too, and am bold enough to pop in a few thousand now and then if I see something that really and truly looks good. (Over the past year, my total IRA account is up almost 40 percent -- not bad for an amateur!) Fidelity now also lets me trade for $8 a trade, which helps.

Today...

I decided to see if there were any good-lucking day trading prospects.

Again, a caution: This is NOT for neophytes, and it is NOT recommended that anyone "gamble" with any money he or she cannot afford to simply lose!

At about 7:00 this morning, I spotted a release indicating that Dendreon (symbol DNDN) had announced an 89 percent improvement in survival time for prostate cancer victims vs a placebo. (I am generalizing here.) Often, announcements like that lead to a feeding frenzy of sorts among traders -- but not always. Beware, as I have said!

Since my account allows me to trade pre-market (8:00 - 9:15 a.m.), I looked at DNDN and saw that it was moving upward - rapidly. I took a chance on 200 shares, and soon bought 200 more, as it kept moving upward. When it had gone up enough, I instituted a "stop limit" order to SELL it all, if it fell BACK to a set point that guaranteed me a profit of X amount, after commissions.

As it went up, I changed the stop limit upward twice. By 9:00 or so, it had spiked at more than $1.50/share above what I had invested, but was now starting to drop, as I watched. Sure enough, my account sold out at the last stop limit -- just before it kept dropping downward. After commissions, and with an investment of about $4200, I had made $475 or so in about 25 minutes. Not too bad!

Of course, now that the market is open, it may shoot up a lot more as the day wears on, and I may kick myself for not keeping it, but a profit is a profit, so I'm satisfied. There will be other opportunities, after all!

My point is this:

Do NOT be afraid to LEARN how to invest -- and/or trade -- but do NOT run out and do either without taking a LOT of time to really get the hang of what it's all about. And, again, realize that you should never put money at risk if you can not afford to see it suddenly evaporate.

I'm strictly an amateur. In pre-market trading, especially, as I did this morning, there are "sharks" (VERY big traders) in those waters, and it is NOT a simple thing to fool with, but it can be a helluva lot of fun, and you can sometimes make a buck or two! ;)

Vermonter





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