Think about this one. Has your broker EVER recommended that you place a stop-loss order on a stock after you have bought it? Ninety-nine percent of the brokers never think about helping you protect your capital. In fact these brokers are not taught this very important technique. The brokerage companies don't realize that by helping you get out of a poor position it gives them more of your money to trade again to make them even more commissions which is all they really care about.

You see, they don't want to recommend stops because if you sell out you might take your money out and that's a no-no. Or worse yet, you might blame the broker because the stock went up after you were out and now you are mad. Let me draw on my 30 years of experience as a trader and let you in on a little secret. Three weeks to 6 weeks after you have been stopped out of any position that individual issue is going to be lower than where you sold it in about 75 to 80% of the time. When you are at the gaming table you must go with the odds.

I hear your protests. "But I'm not a gambler, I'm a long term investor" No, you're not. You are just as much of a speculator as the day trader; the only difference of the time frame. To make a substantial return on your investment you must keep you funds working with profitable stocks or mutual funds all the time. You cannot afford to buy something and have it drop in price and then wait months or years for it to come back "even". It is not "even" because you have lost the investment power of your cash by not being in some other stock that is going up NOW not some nebulous time in the future.

Stops are easy to figure. Don't ask your broker; he probably doesn't know. Very simply you might place a 10% stop below the low of the previous 2 weeks and keep moving it up every Monday morning. Let's take a look at what might have happened in this recent crazy tech market. Microsoft went to $119 and as of this Friday, May 26 was $61; WorldCom went to $64, now $37; Palm $165, now $21; E-trade $72, now $15; Ask Jeeves $190, now $20; Red Hat $151, now $17 and there are plenty more like this. Many are 80% lower and it is doubtful we will see new highs in our lifetime. If you owned any of these last year and did not have a stop sell you are hurting today.

And if you did get stopped out and it went to a new high you could buy it back again placing the same kind of stop. Using this method to sell is letting the market tell you when to get out and not guessing that this is the high. You don't know. Neither do I. Let the price action tell you. This is what the professionals do.

You must learn how to use stops or you will never make real money in the market.