Dykstra: Playing Through the Pain

Painful! There is no other way to describe the bloodletting that has taken place in the market the last week.

The Dow has lost nearly 600 points since last Wednesday's close. The Nasdaq has shed nearly 150 points since that time, while the S&P has fallen more than 60 points.

Investors looking for something to cheer about are better off trekking out to the ballpark, sitting in the bleachers and rooting for their favorite team rather than watching their 401(k)s give back past gains.

That said, those looking to play it smart should pay attention now, it will pay off later. When investors get spooked or can't handle the heat, they make mistakes. The pressure gets to them.

That's especially true when the herd mentality kicks in. Investors they sell with their heart and not their head. They sell too early, leaving money on the table.

If you do your homework and capitalize on the mistakes of others, you can put yourself in position for a nice payday. This is where people really make money.

I am often asked about "stop-losses." Readers want to know why I don't employ them. That question is particularly relevant in light of the week we've had.

The main reason: I monitor the market every day, and actively evaluate every position every day. If it ever comes time to bail on a position, I will let you know. On the upside, I put in an automatic sell -- a good-till-canceled sell order $1 above my average entry price on all my picks to capture a win when it comes. On the downside, I do not like to have trades automatically executed. It can lead to selling too early and realizing losses when a win is still very possible.