Page 413 - THE MARKET WHISPERER

THE MARKET WHISPERER 40 9

The 3x3 Method

I am aware of the fact that not all readers of this book can devote several
hours each day, or even each week, to trading. If you do not have the ability
to spend more than an hour or two per week in trading, buy stocks that
from the outset you wish to hold for swing periods.

In other words, focus on stocks you want to hold for anything from
several days to several weeks. Work with them according to the 3x3 method.
Even if you do have the time for daily trading, you need to understand that
swings can contribute nicely to your profits, so there is no reason you
cannot “spice up” your intraday trading with several stocks held for more
than one day, or even bought in advance for this very purpose.

SMART The more you distance yourself from the computer, the
MONEY better off you’ll be. Use a set of automatic orders to manage
your stock. This reduces the element of psycho-emotional
involvement and stress.

The 3x3 method of money management which I’ve developed and fine-
tuned over the years is likely the simplest, important, and effective way I
have of teaching you money management. It is so good that I’m prepared
to vouch for it by saying:

If you keep its principles, you will find it very difficult to lose!
You can, and should, apply the method’s principles using a set of
automatic orders, especially if you are among those traders who are active
daily. The method is valid for buyers and short sellers, but for the sake of
convenience I will focus on long buys.
• Choose a stock according to the rules we have learned so far. After
buying it, operate in the following manner:

1. Stop Point
Enter a stop order 3% below the entry point. Why 3%? When a stock you
believed would trend up goes against you by 3%, it would seem you’ve
made a mistake. You thought you bought at the right entry point, you
thought it would break out strongly and put money in your pocket, and