Trading Closed-End Funds: Some Final Notes
Description
This article is from the A Guide to Closed-End Funds (CEFs).
Trading Closed-End Funds: Some Final Notes
- Be wary of overtrading. Sure signs of overtrading is mounting confirmation slips on your desk, your deep-discount broker recognizing your voice and calling you by your first name (hey, he loves you), and no signs of profits. Be more selective of your entry points and exit points. Curb that urge to pick up the phone every day. Good buying opportunities come only once in a while, in between you sit and watch the Simpsons or whatever other mindless activities you indulge in.
- Place Stop Loss Orders. Place a stop loss order after you buy at a point where you cannot afford to lose any more money. A golden rule, but if you do it religiously, you will be around to talk about it.
- Move up loss limits as your position profits. The trick is not to suffer a loss, no matter how small.
- Don't expect every trade to net you 35% as in the above example. You will lose some, you will win some. The point here is to cut your losses, let your winners run, and give yourself the additional edge to beat the market by investing in CEFs, picking them well, and following your strategy.
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