Here is an example of how I speculate in a biotech stock. I will be making a purchase of THLD, Threshold Pharmaceuticals, $4.84. It has met all my requirements to be a good, low-risk speculation. Even so, I am only going to commit 25% of my capital to it now. If the price moves higher I will commit more but for now I will just have a partial position.
There are a lot of complaints about how the stock market is rigged against the small investor and for the most part they are right. But what is not? The same charges can be levelled at sports betting, collectibles, silver coins, and even real estate. It is not a perfect system by any means but with the right money management you can eliminate most of the flaws that cause losses for others.
By making a partial purchase to today I am protecting the majority of my capital if I am dead wrong. If I am dead wrong today maybe I can pick up more shares in the future if THLD shows another buy signal at a lower price. If THLD moves higher that built-in profit to allows me to ride out wild swings in volatility if they happen down the road. To successfully speculate you have to have the faith and patience that you are doing the right thing. Sound money management gives you the confidence and ability to weather the storms when they occur. By sticking to plan you give yourself a much better chance to win.
There are a lot of complaints about how the stock market is rigged against the small investor and for the most part they are right. But what is not? The same charges can be levelled at sports betting, collectibles, silver coins, and even real estate. It is not a perfect system by any means but with the right money management you can eliminate most of the flaws that cause losses for others.
By making a partial purchase to today I am protecting the majority of my capital if I am dead wrong. If I am dead wrong today maybe I can pick up more shares in the future if THLD shows another buy signal at a lower price. If THLD moves higher that built-in profit to allows me to ride out wild swings in volatility if they happen down the road. To successfully speculate you have to have the faith and patience that you are doing the right thing. Sound money management gives you the confidence and ability to weather the storms when they occur. By sticking to plan you give yourself a much better chance to win.