http://www.elitetrader.com/vb/showthread.php?threadid=176453 http://www.elitetrader.com/vb/showthread.php?s=&threadid=161449&highlight=my+plan I am 18 years old trading with 30k as of 9/15. I trade stocks that overreact to a catalyst. I take the opposite view to a stock that just had a big one day move. I DO NOT try to pick tops or bottoms of momentum driven stocks. I try to step in before and capitalize off of the bottom pickers or profit takers of a stock that just ran up or got hammered. As I post each trade I will explain why I placed each trade, If you have any advice, praise, or critisism (spelling??) of a trade, then please chime in. Hopefully it will make us both better. Thats one of the reasons I am starting this journal, also I want to end some of the impulsive trades that cost me early on. This journal will hopefully make me think about and research each trade even more thouroughly than I do currently.
Hester, Hello again. You might do ok with your stragety but just a warning. If there was one thing that I wish I would have done different in my earlier years of trading it would be this. " no counter trend trades" You can get lucky sometimes but I really think that it will bleed most new traders to death. Be cautious.
Thank you for the advice, I appreciate it. I do not consider my strategy a counter trend trading strategy. The stocks that I am trading are reacting, or overreacting, to a catalyst. I believe that it has nothing to do with a prevailing trend. In fact, I often trade with the trend in a way. For example, say a biotech company (thats probably the majority of the stocks I trade) has been rallying for a month or so, breaking through resistence, plenty of momentum, so on and so forth. Then one day it releases news that one of its many drugs in their pipeline fails to meet a safety goal in a mid stage trial, and the stock falls 30 percent. That is a primary target for my strategy as I would consider this an overaction to not a major setback. So I would therefore get long which would be the direction of the prevailing trend up until today. I do not see the trend being reversed by this setback because it immediatly gets discounted by the market, and then the trend can resume since it hasn't damaged the story of the company excessively. There should be some bottom fishing provided it still has many other drugs and an average or better balance sheet. Also, There may be some profit taking depending on the short interest the stock had. Those two things could add a bounce in the next couple of trading days. Plus, if I decide to hold the position longer, then there is one more bullish catalyst in the future, if the drug can eventually meet its safety goals. I know that is kind of a lengthy example but thats the mindset behind my trades in a nutshell. Of course I don't just trade biotech stocks. I'll trade any stock providing I deem the drop or pop an overreaction and that the trade has a good risk/reward. Thank you for your opinion though, I'm not shunning you I'm just telling you my mindset behind my strategy and why I disagree.
also, I very rarely trade a stock that has reacted to earnings or a down/upgrade. I feel that 99.9% of the moves related to earnings are completely fundamental and are not an overreaction. The only stocks that overreact to a down/upgrade are usually small or mid cap stocks. Its rare that an analyst down/upgrade can send a stock soaring or crush it, so the risk/reward just typically is not there.
FLEX puts. 20 oct.7.5 at $.49. Small position and I had to act quick because it is already pullling back. First started looking into it at +10% and when I bought the puts it was down to +8.5%. I couldn't find any news on it other than Cramer plugged it heavily on Mad Money, which I caught part of last night. I don't think that warrants a 10% move. I only bet a grand because I didn't do a lot of research as I had to move quick and the risk reward isn't great. I won't be in this trade long.
Would of liked to short anadarko, but internet was has been down since noon and I just got it back up. Thought about calling in the trade but then I couldn't do sufficient research. Down 1.5% after hours. Oh well.
Hester, I like your put options on FLEX. Gap up this morning and RSI is way overbought. Look at SWKS that Crmaer pumped up, it went down and didn't participate in the 3 up days in the market.
at 18 you don't know shit about crap. here's my recommendation. take your 30k put it in a cd. take mathematics and statistics in college. sim trade for 6 months. No need to rush trading you first have to get knowledge. maybe sim trade for a year, take more college courses. Also date some hot young women.