Reader Mailbag: Buy or Sell?

Cutting your losses is the most important rule of trading.

If you want to consistently make money in the stock market, you first have to learn how not to take big losses. Successful traders know when to walk away from a position that moves against them. Everything else � even your actual trading system � takes a backseat to this one crucial rule. After all, how are you supposed to book consistent gains if you allow big losers to cut into your profits?

Today, I�m going to review some of the weaker looking tickers and charts you�ve sent in this week. I�ll then tell you whether I would hold the stock in question � or cut my losses.

Let�s get to it…

I would really appreciate any information on Oryon Technologies (OTC:ORYN) founded in 1997, based in Texas with a research center in Singapore. Is this another pump and dump scheme?

� G.P.

Here�s a daily look at ORYN:

From what I have read, I have my suspicions that ORYN has been promoted recently or is currently a promoted stock. I ran across a few older e-mail solicitations from a couple of different addresses urging readers to buy shares

But even if we completely ignore the possibility of a pump and dump, ORYN does not look like a healthy stock. Shares have fallen from $1.25 to 80 cents in a little less than a month. I can easily draw a downtrending resistance line (in blue) that proves the sellers are in control of this stock. Shares would have to break through 90 cents just to stop the bleeding. And that�s still no guarantee that the stock would move higher…

No matter what price you bought this stock, now would be a good time to cut your losses and move on. ORYN is up double-digits today. If I was stuck with this position, I would use the opportunity to sell into strength, saving my remaining capital for another opportunity.

I have recently bought shares of Next 1 Interactive Inc. (OTC:NXOID)… Do you think I should hold on to them, or sell?

L.F.

Here�s a daily look at NXOID:

I don�t know anything about this company. I don�t know what business or industry it�s in. But I do know you should sell the stock immediately.

Since the beginning of the year, NXOID has consistently dropped � all the way to 8 cents from more than $2. There is absolutely no reason to hold on to this stock.

It�s easy to trick yourself into believing that a stock with this kind of chart can somehow pull out of its downtrend. Think of it this way: if NXOID doubled from its current price, it would only be worth about 17 cents. So even if you bought a few days ago, you would still be underwater after a 100% gain. Any idea you have about its recovery is false hope, and nothing more. Once you come to terms with that fact, it will be easy to sell your shares.

Thinking About Buying Stocks?

Don�t even think about buying a stock before I have a chance to rate it! Send all of your tickers, charts and questions to editor@pennysleuth.com.