Wednesday, December 13, 2006

How to Trade TXN?

Let's first talk about specifics. TXN (Texas Instruments) is a great company. In a way, one can make a lot of money from this company as long as the company survives longer than you have made enough from it. The question is whether you have the right strategy or not.

Secondly, any company traded in the stock exchanges can make money for someone (hopefully that someone is one of us). Otherwise, there is no chance for the company to be listed in the exchange in the first place. We are living the capitalistic world. Thing exists for a reason.

Now Let's go back to TXN. One has to have the entire strategy figure out about what to do when TXN is 3, or 30, or 300. One has to know what to do before it reaches any of these prices. Actually, it can reach any of these numbers. Murphy's Law --- things can happen, they will. In order to cover such a wide spectrum of numbers, one has to have a lot of money.

If the money is not enough, one can back up a step by trading SMH instead of TXN since SMH has much less volatility than TXN.

If the money is still not enough, one can be back to trading QQQQ instead of SMH since QQQQ contains more similar components.

In sequence, one can have a long list of back steps, e.g. SPY instead of QQQQ, TIP instead of SPY, or CD instead of TIP, and so on.

Knowing when to stop and when to charge ahead may make a difference, in investing, too.

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