Risky trades.
posted on
Jan 15, 2008 11:18AM
I just got off the phone with an investing friend with my suggestion to buy.
Yesterday he bought some gold stocks on margin because gold price was rising and so were these two stocks. I thought that he could buy some at today's prices.
Today gold price went down and so did his margined shares. He was all up tight because there is a threat that he would have to sell to cover the margin.
My point: Do not buy on margin unless you are really sure you will be able to sell in short time.
Second point: Buying on rising price does not always work because if the price reverses shortly after you bought you may be forced to sell for a loss.
That is why bashers and the one lot trades are in use against tightly traded stocks.
To fleece the foolish.