Today's Quote: “Success is simply a matter of luck. Ask any failure.” Earl Wilson.

There are several good books out there about trading that should be on every trader’s must read list. If you were forced to choose one and only one, the only possible pick would be “Tools and Tactics for the Master Day Trader”. We are going to run a series of excerpts from the best selling book for the next series of lessons. Now in the words of the master trader himself, Oliver L. Velez…

LESSON #5: SELLING THE DOGS AND BUYING THE DOLLS

Many people run their business affairs with a very high degree of professionalism, but fail miserably when it comes to handling their trading/investing program in a financially sound manner. I know a very prominent retail magnet that rids his stores of poor selling items faster [than you can imagine]. These "dogs," as he calls them, get dramatically reduced in price; and once they're sold (usually at a fraction of the original cost), he quickly puts the money to better use by buying more of his best-selling merchandise. This simple, but powerful concept of quickly selling his losers (dogs) to buy more of his winners (dolls) has made him a millionaire many times over. But ask this shrewd entrepreneur to get rid of one of his nonperforming stock market dogs, and you'll get a heated argument invariably sprinkled with phrases (or sayings) such as "but now it's really a bargain" and "I have to buy more." In his successful retail concern, he quickly does away with the "dogs" that fail to produce positive results. However, in his investment concern, he reverts to buying more of his "dogs," while grabbing at every little profit that his winners produce. Does this make sense? To him it does. But I'm working on him. Our concern at the moment is you. If you're finding yourself unable to take advantage of new opportunities because your money is tied up in old, nonperforming stocks, consider having a garage sale. Be determined to keep your money working for you in the best merchandise available. Let's leave the dogs to my friend.