Weekend Edition: The World’s Savviest Investors Know This Instinctively – The Rest of Us Have to Learn It

Total Wealth Staff Feb 22, 2020
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Big profits don’t happen overnight. Wealth is simply not something you simply stumble into unless you’re given your money by your family. Investing success that builds real, sustainable wealth comes from plenty of hard work, careful choices and study.

6 Responses to Weekend Edition: The World’s Savviest Investors Know This Instinctively – The Rest of Us Have to Learn It

  1. Charlie DiDonato says:

    Keith,

    I am hanging in there thus far and have been taking profits when I can, while buying on the dips. I have increased cash to @ 45% and am patiently awaiting a correction, which I believe is inevitable at some time over the next few months. I continue to view investing as a “marathon” and not a “sprint”!

    Thanks for your continued advice!

    Charlie

    • Keith says:

      Thanks for taking the time to chime in, Charlie.

      Sounds like you are doing everything right and, more importantly, in keeping with a carefully thought out plan. That gives you a huge advantage over other investors, especially now.

      And, by the way, I agree with your perspective … a marathon!

      Best regards and thanks for being part of the Total Wealth Family, Keith 🙂

  2. ronald says:

    Your comments are always useful but I have a problem – limits. I like to use debit spreads on stocks that I pick but My problem is with my brokerage (TD Ameritrade) and trying to find the right limit value so I can get filled. Single calls are easy – I just use the Ask value for my limit but multiple leg trades are difficult to get filled because of not using the proper limit. I talked to the brokers there and I get some weird explanations on how trades are filled.

    Is there a reliable technique I can use to find the proper limit value for multiple leg trades that will get me filled? Thanks.

    • Keith says:

      Hello Ronald!

      That’s a great question – fills can be art as much as they are science at times.

      I suggest that you split the bid and ask – meaning take the difference. Or, adjust the price. Brokers have discretion over execution, meaning they look at both the size of the order and availability. They’re supposed to give customers the best possible execution but that doesn’t always happen.

      Brokers can route to the floor, the market makers, to ECNs, to other market makers … depending on where they think you’ll get the best execution. Sometimes, they’re wrong and an order can get hung up or not fill.

      The other thing to bear in mind is that limits are very specific which means your order can go to the proverbial back of the line if a broker has large market orders to fill. That can also happen with non-standard instruments like weekly options or on things like the VIX, for instance.

      Hang in there and try adjusting the price a bit by cancelling/replacing the order if it “hangs” … and keep me posted!

      Best regards and thanks for being part of the Total Wealth Family, Keith 🙂

  3. Chuck R says:

    I use trailing stops sometimes on options. They do not always work how I expect them to. In placing the order the broker’s website puts in an arbitrary amount such as .10, .50 or 1.00. I usually use .10 or .20. What is the best way to determine the correct amount? Price per contract? Thanks for your insight!

    • Keith says:

      Hello Chuck.

      That’s not unusual. Options don’t always have the liquidity needed to make trailing stops work as they would otherwise on a big liquid stock. You can get picked off quite easily as a result. Another way to handle that is a conditional order based on the price of the underlying stock the option is based upon. It’s not perfect but that at least ensures you’re in sync to the extent that’s possible.

      Let me know if a) this makes sense and b) how this works when you give it a try.

      Best regards and thanks for being part of the Total Wealth Family, Keith 🙂

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