Pcaruso, I allow for the possibility of any small cap stock I invest in (as opposed to trade in) to fail. They are generally considered high risk for a reason and I treat them that way. I manage that risk by:
1. limiting the size of my investment in them to a level commensurate with their risk profile
2. setting a floor price to exit regardless of my belief in their future
3. exiting before criteria 2 is triggered if I come to believe they will fail before the SP falls to that floor price
Cheers, Sharks.
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