Hmmm- Having watched the last two weeks trading in illiquid shares and some of the people's posts here I felt it prudent earlier today to post this reminder for the less experienced traders (Yes, I still count myself as one too)
"""I usually get in and out of my trades in a day, especially so on shares that are usually illiquid and low volume and suddenly run hard during the day. I often also trade the share the next day, but ALWAYS use an automatic trailing stop loss, and NEVER hold if the share drops below my acceptable stop loss level. I'd rather lose a small amount of money many times than lose a large amount of my capital on a share which may or may not bounce back. This approach may cost me some potential profits but has done me very well to date."""
Watching the trading patterns on these shares in the past two weeks, I was surprised at how many people buy into a share when it has already run hard for the day, and then WATCH it go down without stop losses. I know that with the extreme volatility we have been experiencing it sometimes backfires when you are stopped out and it goes up again, but my motto is and remains to protect my capital. Trading HUBRIS is also a danger, and I have taken a concious decision to trade less this week as a result.
