Bypass the "Bear" Trap (Part 4)
09/11/2008 12:00 am EST
However, it's no secret that stocks often times pause on their way up, or even retrace their steps a bit. If you see the stock running up, up, up and then it either stands still or pulls back, that's a good time to cash out of your option trade. Enjoy the profits and hold on to your original investment dollars to get back on the horse again.
Go 'back' to your best picks, again and again.
Stocks don't just shoot up in a straight line-they do what's called backing-and-filling, which basically means they build support areas from which they can take off and run to new highs. These temporary dips are great for picking up your favorite names at decent prices before the ride takes off again.
Sure, you might have missed out on some great trades if you were trying to avoid being caught in the "bear" trap that the overall market has turned into. But there are plenty of profits out there for you to capture. So, start looking at earnings reports, trading volume, money flow and performance expectations to pick out some stars of your own to add to your portfolio today!