Last week, I outlined that I was moderately bearish and that I felt the short side was where the money was likely to be made in the coming weeks. Most of the positions I was eyeing up were shorts. Not being psychic, I kept open one long position so as to ensure I wouldn't be too exposed in the event of a run-up in the market.

Doing so, while limiting my risk in my short position in the Dow Jones index, ensured I had a tedious week as opposed to a painful one.

I've said it before: you don't need to be Nostradamus to make money in this business. I wrote in last week's column that I was hoping that the Dow . . . then standing at 12,300 . . . would retest recent lows (around 12,000). Instead, it rallied and has made its way past 12,500, surmounting technical resistance in the process.

Despite being almost 100 points higher than when I initially shorted, I made some decent money on the trade. Firstly, as mentioned last week, I took some pro"ts when the opportunity arose. As soon as I did so, I lowered my stop on the remainder of my position to the break-even point. Accordingly, I lost some pro"ts this week . . . no more.

Similarly, I got it wrong with Research in Motion, writing that I was "not particularly optimistic about further gains" in last week's column. The stock has kept on motoring, rising $5 or so up to $142.50, yielding further gains for a surprised monkey.

I originally bought in around $132, with a target price of $137.50.

Having taken partial pro"ts at that juncture last week, I brought my stop-loss order up to protect my remaining pro"ts while giving the stock some room to run, which is exactly what it did.

As a result, my account balance is practically unchanged from last week's, despite being utterly incorrect in my analysis. Indeed, both positions have been very pro"table ones.

Good trading is a merger of three ostensibly con"icting trading adages. Number one, cut your losses and let your pro"ts run.

Number two, you can't go broke taking a pro"t. Number three, never let a pro"t turn into a loss (similar to the second adage, but not quite the same).

It's basic stuff, but few people do it. They're too busy consulting market astrologers and looking for hot tips. Newbie traders lose out because they fail to see that trade management is more important than trade prediction.

I was talking to a friend about my Dow trade this week. I explained how it had gone as low as 12,250 before rallying 300 points over the next few days, stopping me out of the remainder of my position in the process. His reaction? "Why didn't you just close the position at 12,250?"

I tried to explain that I didn't have a crystal ball and started to go on about the above-mentioned adages, but I could tell he wasn't really getting the point. I went on about my approach to trading, using the example of this week's movements in Research in Motion . His reaction?

"Why did you sell half at $137 if it was going higher?" He went on to ask me where the markets would be in six months' time. Frustrated, I told him I neither knew nor cared but I was pretty sure I'd make some good money during that period. He looked utterly bewildered at that stage.

It's laughable really, but this is how many people approach the markets. No plan. No methodology.

Acting on gut feeling and tips and little more. Invariably, they fail.

Some losing traders keep on trading, without ever really analysing why things are going wrong. You'll "nd this species on message boards, looking for tips, praising their pet stocks ("To the moon, baby!") or shouting insults at other saps who say things like, "No way!

That stock is a dog, man!"

Others give up, become longterm 'investors' and decide to lecture the rest of us on the error of our ways. Their logic seems to be: "I couldn't make money trading, therefore no-one can. All traders are silly gamblers". Whatever. I'm not going to waste ink on those guys.

Returning to Research in Motion, I'll probably close the position if it gets to $145. All-time highs are just ahead. I'd love to keep a portion of the position open . . . stocks that clear old highs often bene"t from a new surge of momentum . . . but I'm inclined to err on the side of caution and protect my remaining pro"ts.

My only other trade this week was a short of Ebay. As of yet, it's gone nowhere, but I'm delighted with my entry ($34.10). There is some serious resistance at this point, with the stock having been rebuffed at this juncture on a number of occasions over the last year. I've opted for a tight stop ($34.80), allowing me to take a decent-sized position in the process.

If I lose, I'll be out 800 or so. Any market selling, however, should provide me with some seriously juicy pro"ts.

Weekly gain/loss: . . . 100 Overall balance: 39,850