Picking right means squat without tight stops

Most of the screen is green. I tried those other background and font colors, but I always return to "Wall St" black with green and red fonts. And today, it's mostly green.

CROX 72.00 +3.02, 4.4%
VMW 119.90 +7.81, 6.9%
YGE 37.12 +2.73, 2.7%
BIDU 366.89 +13.50, 3.8%
RIMM 121.65, +1.84, 1.5%
NTDOY.PK 77.89, +2.51, 3.3%
AAPL 184.98, +0.28, 0.15%
MCD 59.18, +0.71, 1.2%
UA 60.10, +0.53, 0.9%

Then there are two stocks that I am out of my freaking mind about.

lululemon (LULU) 50.00 -0.4%
Longtop Financial (LFT) 26.76 -3.19, -10.6%

I entered LULU a couple of months ago at 38, added later at 47, and the stock eventually ran to 60 on the company's raised guidance for Q3. By then, I'd fallen in love, didn't even consider the possibility that 1) the stock had run way too fast, way too high to sustain any level near 60, and 2) selling at least half of my position wouldn't kill me. But boy, like a fool in love, I held all the way down and today, LULU is at 49.50 in after-hours trading. That's about 17% down. This stock won't announce earnings for several more weeks. It has a history of taking a deep plunge (see the stock's movement before the Q3 raised guidance).

Lack of discipline, no lack of arrogance.

Longtop Financial (LFT) was a bust from the start. I was away late in the day, missed the IPO's run-up from 25 to 32, and when I got back home, I was a fool and chased it. I got shares at 33.70, saw the stock run to 36 in pre-market the next morning and I got way too comfortable. Instead of running wild like China Digital TV had done the week before, LFT reversed field and started running toward its own end zone. Words cannot describe what I wanted to yell at this clown stock, going backwards on the football field. But the real clown was me. Instead of putting in a stop-loss (since I obviously have problems following through on mental markers), I saw it drop this morning from a high of 31.22. I kept thinking, well, the market is up, LFT will follow eventually.

Nope, didn't really happen. Some fake-outs, yes. But late in the day, after struggling to get back up over 29, LFT plunged below 27. At this point, it was way too late for me to sell. I know there's a bottom somewhere in this vicinity. The sell should've been 7% below the top (36). That means my stop-loss would've been 31.80 or so. Note to self. Cut losses fast and clean, fast and dirty, fast and any way. Just do it fast. Set the order and stop the bleeding.

It's ridiculous what my lack of follow-through does. Ten of my 13 stocks were up today, but my portfolio is up only 0.76%. A part of me thinks I'm getting closer to becoming astute, holding my long-term stocks without fear, and trading short-term stocks with a firm grip on the leash. Then LULU and LFT happened, preceded by STV's drop from 55. That shoud've warned me, of course, of this pattern in my behavior.

I did manage to unload the remaining half of my STV position, netting a profit of about $2 per share. (Nothing like what I would've had at 50 to 50, but better than a loss or a case of stomach flu.) So I did something right today. But man, I have a long ways to go before I can truly be Master of my Domain, and you know which domain I'm talking about.

This ineptitude of mine could happen again. Of the 12 stocks I still have, only VMware, Crocs, RIMM and Apple are the ones I plan to hold for years. The rest have to be carefully monitored and set to sell on stop losses, much as I used to abhor the method. I'll cool off and cut myself a bit of a break between now and tomorrow morning. After all, I prefer to buy and hold great stocks, not trade them in full or by halves. But I know my charts, and I'm getting more familiar with behavior in RIMM, for example. There are entry points worth waiting for. I'm better at bargain hunting than anything else.

So, perhaps the solution, the realistic approach with my tendencies and belief system, is to prune my portfolio significantly and focus on no more than 5 stocks. Trade a half-position in some, maybe all. that would increase risk if my analysis is wrong, but I'd rather be wrong with Apple than Longtop Financial.

More food for thought as I head to the car. Slicing off some of my stocks wouldn't be so bad going into the Fed meeting (tomorrow and Wednesday, according to CNBC). My positions in MCD and UA are very small, just for my nephew.

The whole swing trading thing in the past few weeks has been a mixed bag. I'm break even there. All my good, fairly well-timed entry points have been solid. But it's the few that have killed my profits. And it's all because I have hesitated to be as aggressive with keeping my profits as I am with finding great stocks and bargain-rate entry points.

Enough. It's time for a break.