NEW YORK (TheStreet) -- Tell me if you have seen this movie before.
A common mistake by traders and investors is chasing stocks. The excitement and the worry over missing out causes a rash decision and you push the "buy" button. Now you own the stock.
In an instant you receive the "order filled" message and simultaneously the price begins to fall, as if your buying caused it to happen. For the rest of the day the price continues to fall.
"OK," you say to yourself, "I will give it one more day," to which you find holding another day results in a greater unrealized loss. Within a few days you're so frustrated that breaking even is appealing.After a week or two, the once-bullish darling is finally approaching your breakeven point, and you stare at the monitor as if to use the "force" to lift the price higher. The stock price may get close, even within a penny or two, but sure enough, down it goes, leaving you with the feeling of "if only I lowered my offer price below that round number I would have exited with a loss of a penny or two." Not wanting a repeat, your next step is lowering your offer price a few cents "under" the round number peak from earlier. Sure enough, the third time is the charm and all is well again in the world because you're finally rid of that last embarrassment, while simultaneously promising under your breath never to do that again (for the 10th time). If you thought you were frustrated before, now you're in for a real treat. The stock you just exited out of for a loss of a few cents continues higher. During the same day you let your shares go, the stock closes another point or two higher. For the next four days, you watch in anguish as it becomes the Energizer bunny on speed as it keeps going and going.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV