The New Sell and Sell Short: How to Take Profits, Cut Losses, and Benefit from Price Declines, Expanded Second Edition

MARGRET’S METHOD—PUT IT ON THE WALL

In addition to the electronic diary, I want to give you a low-tech method for keeping track of planned trades.

You may look at a chart and see a beautiful trade starting to come together—but it is not there yet. You may say to yourself, “If it comes down a bit more and its support holds, I will buy it.” What are the chances of you remembering this plan three weeks later, when the stock actually does what you expected?

The best trades come together slowly. You may need to wait for more pieces of the puzzle to emerge before you can pull the trigger and place an order to buy or sell short.

Years ago I adopted a low-tech system my good friend Margret used for keeping track of her trade ideas. On one of my first visits to her tropical penthouse I noticed that her trading room had two bulletin boards with charts pinned to them. Margret explained that whenever she saw a trade starting to come together, she printed out the chart of that stock and marked it up with a red pen, showing what the stock had to do in order for her to buy it. Margret pinned those charts to the bulletin boards. Whenever she walked to her desk she saw the charts with her hand-drawn action signals. There was no way this woman would let a good trade pass her by.

If you decide to implement Margret’s method, be sure to take the charts down from the wall after you either enter the trade or cancel the plan. Make sure the visual records on your wall are fresh and up-to-date. ...