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Justin Mamis isn’t that well known but he is the author of several trading books, of which “When to Sell” is far and away the best. His book was published in the 1970’s when he was writing The Professional Tape Reader. Yes, the same one that later Stan Weinstein took over. As you’d expect, the two have very similar perspectives on the stock market.
I was just thinking about Mamis’ book these past few days and trying to remember where I’ve put my old copy when I stumbled on Tischendorf’s post about it. Talk about synchronicity!
When you think about it, the ultimate decision is when to sell. I recall reading in the Market Wizards book series an interview that Schwager did with a trader who said that he had tested completely random entries and with his proprietary stop loss and trade management process, it had been shown to be profitable. Not as profitable as when the signal was triggered by one of his trading rules but still, profitable. But when you think about it, when to sell is really furthest from our minds.
Instead, we usually, painstakingly analyze and ponder when and where to enter a trade. This is a case where intuition isn’t doing you any favors. Anyway, Tischendorf quotes from the book:
Rule One of the professional trader is: When a stock doesn’t do what you expect it to do, sell it. No hesitating, no questions or doubts raised no conjectures of the way it should have turned out, or might still turn out, no dreams of how it will do what it was supposed to do‚ tomorrow. The pro never says, “I’ll watch it one more day”. He doesn’t phone an analyst who’s been following the company and ask, “What’s happening? Is there any news?” All too often, the delay in searching for the‚ “why?” is costly. The desire to be perfect is one of the prime bugaboos of the stock market, but it’s a compulsion that belongs on the psychiatrist’s couch, not on the exchange floor.
The whole book is really about tape reading. While technological advancements have made the “tape” an anachronism, the idea of watching the ebb and flow of the market is still at the heart of speculation. And that is why it is the one skill all successful traders have. It is an edge without which you can’t really expect to bank serious coin. This is the skill that Steve Cohen developed as a teenager by hanging around a local brokerage office watching prices scroll across the wall.
If you don’t have Justin Mamis’ book, When to Sell buy it, it will help you become a better trader. There are few trading books that stand the test of time like it.
And check out Tischendorf’s blog. He’s a trader from Germany who has many insightful posts.
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