Gary B. Smith Gets In the Last Word About the TV Show

If you watched Saturday, check out Chartman's additional thoughts here. Or get some insight before watching Sunday's re-airing.
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Editor's note: Want to rate the predictions of the panelists on the TV show? Do it now. If you missed the Saturday morning airing, watch Sunday at 1 p.m. ET on Fox News Channel.

You saw the show, right? But besides thinking "Hey, that Gary B. Smith is a hunk!" you're also thinking, "What in the heck did he mean by a 'low risk' entry on

Broadcom

(BRCM)

?" Well, good question, so let me explain.

First, when I talk about a low-risk entry, I suppose I should also add "high reward." With BRCM, for example, you could go long on Monday at the bottom of the trend channel, with a tight stop. If you get stopped out, well, you only lose about 4 points or so. But if BRCM works according to Hoyle, then the upside could be close to 40 points. So, low risk, but high reward. That's the real message I was trying to convey, and the essence of good trading.

Point No. 2, different subject: On the last segment of the show,

Herb Greenberg

,

Joe Bousquin

and I had a short discussion on the topic of day trading. Boy, here's where an hour show would have really helped, as I think we could have batted this one around a bunch. But with all due respect to Herb and Joe, I'm betting I'm the only one who's actually done daytrading, so let me add a few more thoughts.

One, is it gambling? Well, if you go in everyday without a plan, just hoping to make a profit by your sheer "good eye" and "fast hands," then I'd have to say yes. You're betting on seemingly random events with no "edge," as

JJC

would say.

Ah, but if you have an edge, is it still gambling? If you know -- whether by gathering statistics, raw experience or whatever -- that by buying all stocks with X characteristic, you have an 80% chance of selling them for a profit, are you still rolling the dice? Perhaps, but now you have the odds in your favor every time you "wager" a dollar.

So, in deference to Herb, maybe daytrading -- heck, any trading -- is gambling. But if you have a plan in place, at least you get to be the casino. And last I looked, that's a pretty good business to be in.

Gary B. Smith is a freelance writer who trades for his own account from his Maryland home using technical analysis. At time of publication, he held no positions in any securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Smith writes five technical analysis columns for TheStreet.com each week, including Technician's Take, Charted Territory and TSC Technical Forum. While he cannot provide investment advice or recommendations, he welcomes your feedback at

gbsmith@ibm.net.