advice needed, page-19

Hi JackJunior,

I'm sorry to read of your problems and the posters that have replied so far have offered some great advice.

I started trading over a decade ago and if I had known then what I learnt along the way I may never have started. I post rarely now (just broke 10,000 posts on HC - there is a whole heap of my life I'm never getting back!) because it just began to feel like wasting time Groundhog Day style. But just this once.....

When I started it felt like the market never did anything except go down. That's important for you because HC (and the markets in general) are now full of people who can barely remember a time when the ASX has done anything but go UP.

If the markets have turned for the time being (and it looks like they have) then you need a different set of skills other than buy and hold.

One of those might be that this is all too hard - that you have come to the party too late - to cop the loss and take it as one of life's lessons. That would be a valid and possibly smart decision.

I have no idea what CVN will do from here (and I am reasonably good at charting I think) so I'm betting you have no idea at all other than it seemed to be a good idea at the time.

To be fair you did buy the rising trend and thats as good a starting point as any. The trouble is that the trend has broken almost as soon as you have bought.

Rule Number 1 - Preserve your capital.

- The small loss you take now could easily grow into a huge loss in time (as you have already experienced) and a bear market means the odds are against you winning anyway. As others have mentioned you need a sound reason to be in a stock and very tight stoplosses. If the stock doesn't do what you expected GET OUT! 5% is more than enough. If you stay you will have many experiences of seeing a stock you sold out of jump back up and leave you feeling stupid. In a bear market you will have 10 times more experiences of watching the stock spiral away down without you on board!

- Beware chatroom sirens lulling you into doing things you shouldn't. Its not their money on the line. Discipline and sticking to your trading plan in every stock is the diffeence between life and death. There will always be a true believer for every stock urging you to hold on.

- Remember a 50% loss needs a 100% gain to recover! In a bear market losses are far easier to come by than gains.

Less than 10% of stockmarket traders survive in the long term. Can you afford to lose the money? If not then for Christ sake don't borrow.

Or maybe get a SHORTING Account. At least if you are SELLING stocks and then BUYING them back you have a better chance in a bear market as you are playing the trend AND doing it with ASX200 stocks. Dont confuse CFD's with shorting. CFD' allow you to leverage your capital and you can LOSE many times your actual asset base.

How do you select your stocks ? If its by reading stockmarket forums such as Hotcopper then quit NOW. get a proper job at Crown Casino or Jupiters. At least you will have live people for company, LOL!

If you are going to keep going you will need to learn. (This is the point that most people cut and run. "Work?" "Hell, I thought all you had to do was buy some shares and sit back with the new car at the ready!".)

Read.

Start with Reminiscences of a Stock Operator by Edwin Lefevre. Its 80 years old but JP Morgan still insists every staff member must read it. Buy a copy from Borders or eBay and find out why.

Then learn a discipline for trading. I'm a chartist and it serves me well. But you may be a fundamentals type person. I reckon charting works better because in my view it tells you what is happening or about to happen rather than fundamentals which tell you what happened 6 or 12 months ago.

The other alternative is Russian Roulette which if you haven't already worked it out involves someone ending up dead. Most likely you (financially).

Technical or Fundamental - at least you will have a strategy for investing and be looking more deeply into the stocks you buy.

Whatever you do don't keep upping the stakes to try and gamble your way out. The losses you have already taken should tell you you dont currently have the skills to play. But you can get them.

Its up to you whether you want to or not.

And either way good luck. Your loss was someone elses gain. Find out how they gained and you lost and the sharemarket is your oyster.

Cheers,