This is why you need stop losses...

Today was a bloody day all around and not something I needed to be around for. Let's examine what I did wrong:

I hesitated in setting a stop loss for Tessera at, say, $21. In my mind, if it bounced to $21 again, it was just going to bounce back up and I didn't want to miss the swing up and lose some money. Instead, it tanked right through its support to $20.29. Jesus. Each of those cents it dropped cost me $2. I'm down $206 on $4,058 worth of Tessera, because I didn't set a stop loss.

Tessera isn't dropping on any news. It's not dropping because of a loss of value or patent issues. No, it dropped, like just about everything else today, on news that GE fucked up and didn't hit their estimates. Because GE is such a far-reaching conglomerate and because they have some exposure to subprime with GE Capital/Finance, they double-whammied and took everyone down with them.

Since I want to be in Tessera *anyway*, this was a particularly painful lesson: I should have had a stop loss at $20.90. It would've tunneled right through that before landing where it did and I would've saved $122 of pain. I could've bought my 200 shares back at $20.90 and dodged that pain. But instead, I kept myself from establishing a decent stop loss. It's part art, part science to establish a proper stop loss that will keep me from exiting just as it's about to upswing again. But I needed one today.

Abbott started to dive and kept on going. I should've held off on purchasing ANY stock at the beginning of the day with something as significant as GE's news, especially considering how sterile ABT has been the past few weeks. I'm really hoping things bounce back Monday. I also need to examine stop losses to set now.

I also have a great deal more exposure with 200 shares. A relatively meager bounceback will bring this all back and a spike will boost me quite happily. I'm guessing and hoping TSRA makes it back into the high $21-$22 range next week, on no news.

Meanwhile, I'm still looking for a 19-day strategy. Ideas are welcome.

Visa stings, BSC turns out to be a good call...

AAPL	139.53	+6.26	(4.70%)
GOOG	460.56	+27.01	(6.23%)
BRK.B	4,341.00	-6.88	(-0.16%)
V	59.73	-4.62	(-7.18%)
BSC	11.28	+5.32	(89.24%)
Value:	7,031.64	-135.31	(-1.92%)

Some confusing numbers up above, due to Google knowing I was only holding BSC for the day and neglecting to report any of my profits on it because it's technically no longer in my portfolio. At the very least, you can see that the market had a strong day in general with Google leading the charge up $27.01. Apple was healthy as well at $6.26/4.70%. But Visa met with some nasty downtrending with someone apparently selling heavy into the rallies that would've otherwise drove it up.

As a result, I've gotten dangerous close to my 15% trailing stop. And as a result of that, I think I'm going to switch it to just a flat stop at $57 to buy myself some cushion (about 50 cents worth) tomorrow. I'm predicting it bounces heavy tomorrow—a lot of people want this for a long term buy and were waiting for it to drop below $60 before buying in. Now will be their time and hopefully I can exit the position around $70 or $75, or at least establish a nice and healthy trailing stop there.

I won't let it drop below $55 at the VERY least though, and I'm going to set the stop loss at $57 right now. It'll suck to lose just about as much as I made today on BSC, but that's how things work. (It's more or less just frustrating because I think a bounceback is imminent, but waiting and wishing doesn't make it so.) (Okay, I lied. $56.75.)

Symbol	Action	Qty		Order Type	Order Price	Duration
V	SELL	35		STOP	$56.75	GTC

Fun with trailing stops...

Open Orders

Status Symbol Action Qty Order Type Order Price Duration Order Time Session OPEN V SELL 35 TRAILING STOP 15% $54.6975 GTC 3/21/2008 4:25 PM Regular

Today's a holiday so nothing going. I've placed a trailing stop (more on them here) order for 15% on my Visa holding, since I want it to be a medium-term play and while the market settles, it could have some volatility yet. If it drops 15% or more at any point, a stop will trigger a market order to sell all 35 shares I own.

What makes it a trailing stop is that the "15%" mark is relative to the high point for the stock. As the stock's price increases, the stop "trails" or moves with it, providing a moving safety net that allows you to lock in profits. The order price is listed at $54.6975 because that represents the current 15% stop loss level. And if it triggers that, it'll suck and I'll lose some money, but if it collapses back to $50 or some such, I'd lose quite a bit more. I can always rebuy on the dip. Or, perhaps not buy on the peak in the first place. :-)

The GTC indicates that it's "Good Til Canceled" which is pretty self-explanatory. We'll revisit this order next week and see what happens with good ol' V.