perhaps a santa rally?, page-8

Farah: Actually you have raised a valid point about me saying don't sell at a certain price and the possibility of others following my advice....Even though it's important to DYOR (I hate that acronym)..I wouldn't like people to lose money by following my advise...

So I just want to clarify what I mean by not selling at a certain price...

I have learnt the hard way that it's never a good idea to sell at one of the fib ratios especially the 50% or the 61.8% because this is where many traders are looking to enter a position...You can often get caught by selling here only to watch the stock reverse....You need to use stops placed below these ratios and have a plan in place for if and when they get triggered....

When MEO found support at 45c, if you were holding or had taken a long position, a stop should have been placed under this price to limit losses....ie 44.5...

We are now approaching the 61.8% retrace..with the Dubai situation looming ... Anything could happen really ....but a gap down to this ratio could be followed by a bounce...selling here could see you crystalise losses...but it could also just keep going down...

So rather than saying don't sell here..this is what I would do...

If I were holding MEO now I would place a stop at 39c because support held above that price today on lower volume...but depending on what happens tonight with the DOW... tomorrow is another story....

If Meo hits 39c....I would wait and see if 36c holds and have a plan in place to either buy in at a cheaper price or buy back my stock if the price bounces off 36c...

I took a hit at 5oc which at the time hurt but in hindsight I'm relieved...

Everyone talks about stops but stops also need a plan of their own....

The reason a lot of people don't use stops is because they don't have a back up plan in place in the event that their stop gets triggered and the price reverses...

Before you enter any position you should always have a plan in case you are wrong and another plan for your stop....

So often people's stops get triggered and they are so dismayed because they have lost money they just give up...that's the moment when the money has really gone...

A stop is not a surrender it's an opportunity to withdraw the troups and plan the next attack!!!

If you fail to plan ...you plan to fail!!!