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The StockTwits® Edge: 40 Actionable Trade Set-Ups from Real Market Pros by Ivaylo Ivanhoff, Howard Lindzon, Philip Pearlman

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CHAPTER 46

A Contrarian at Heart

John Welsh, @johnwelshtrades

The small-cap momentum crowd loves to hate John because he's the guy betting against them. The stock market is not about making friends; it's about making money. This is just a simple truth that John embraces. If John gets negative on a stock you are long, watch out; he's often correct in his assessment.

CUTTING LOSSES QUICKLY

I started trading in the late 1990s, during the Internet boom. All stocks went up and I was hooked. You could have thrown a dart at the board to pick a stock and still make money. Stocks would go up 50 percent in a day on news of stock splits.

I took a particular interest in the biotech stocks, because they were and are the most volatile. Over the years I have accumulated knowledge regarding most biotechnology companies and how they trade and what catalysts will move them up or down. Experience helped me internalize the buzzwords that make stocks move and attract liquidity.

My hardest trading year came in 2001, which ironically was the year after the Internet crash in 2000. It is my only losing year on record. Not a specific reason stands out, but it was the constant nonprofitable trades that wore me out while working a full-time job. I remember thinking at the time: Trading used to be easy, but not anymore; maybe it's time to cut my losses, take my capital, and move on.

The major turning point in my trading career came when I started to track my trades on an Excel spreadsheet, as shown in

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