Once in a while, a stock gets away from me, at that point I shift gears with the strategy, and at some point I will likely average in. I also have a stop plan in place. And a S&R plan in place. I have found that I can almost always trade around my losers. The one strategy I absolutely hate is the flat dollar stop. But I look to that number as an indicator that I need to take aggressive action with this position, which usually means I need to trade out of it. I am being a little ambiguous here, I realize that, I just don't want to give Don too many ideas for improving his boot camp! LOL! Good trading to all! Mike
I'll have to head South for some lessons......(as you know, I always wish you the best trading success)...keep it up. Don
I honestly think that we may agree on a lot more than you may think. If you look back at some older posts, I think we even agreed on ET at times. All the best...!! Don
hi Don, thanks for taking the time to look these over. Patterson is the stock, PTEN. I trade both, have been. Picked starwood as soon as we had traction in spot oil and it (HOT) started to range trade(newyear). Patterson, well what can i say about it. As you can see, it's had quite a spike. Fortunately, i had a FULL line out from @$18.65 to $26.5. My last sale was actually yesterday morning, twice i sold avg. $27.15. I used margin to trade in and out of the entire move up because i want to sell at my full target price. Worked well, doubled my line in four months. So, i noticed a shorterm 'affect' regarding PTEN and HOT. At this point, that is all it is. Intraday, when we have a pending move in oil or the day after we have a sizable move in oil; PTEN and HOT (oil service x. hotel lodging) converge and diverge within minutes of one another. It's logical. Nothing more, nothing less. My reason for bringing it to the attention to this forum is twofold. Can we build a highly correlative shorterm model using the 2 sectors esp. the two stocks? And, i was hoping someone with greater knowledge could explain this reaction to the forum. Suffice to say i am in no need of hand holding but would appreciate some data. thanks for your time don. alex
Why would you want to trade an oil stock vs. a hotel chain?? If you want to pair trade, do it with correlated stocks, in the same industry! Evaluate them on fundamental and technical merits, go long the strong one and short the weak one. Pay attention to equal capital allocation and the historical spread price in determining which pairs to trade. When I was heavy into pairs, I would review 200 pairs daily to come up with a hit list of about 10-15 for the next day. Keep in mind, there are many long/short market neutral equity funds with teams of programmers, analysts and traders you will be competing against! This sector currently is the largest among single strategy funds. Just FYI. I am not saying you can't be profitable, but you must be well capitalized and know what you are doing! Good luck.
Don, Thanks so much for telling us this. It's nice to know the difference between building 'wealth' and making steady 'income'. As for income, it looks like you have it made. I'd like to perfect my income game. My strong point is spotting longer term trends or ranges and trading through. How do you build wealth? If you don't mind me asking. Also, how much does one pay you for ALL your knowledge in one heaping spoonful?(LOL) take care alex p.s. (i'm looking for a GREAT retail broker with direct access that doesn't sell order flow--you need not comment if you do not wish)
Hi NY, Thank you for the info. I do not pair trade. As i stated in prior threads, it is a short term 'strategy' that has merit only because of profitability trading it. Thank you nontheless for your insight. It is helpful. take care alex
Stop, be really careful...a short term "apparent" correlation is quite deceiving. A short glimpse might make a male with long hair and a female appear the same with a short glance, but the differences become apparent at all the wrong times (LOL). We start with P/B for similar industry pairs, then go back 3000 days for historical movements, compare them with 6 and 3 month relationship, adjust for market caps, etc. etc. etc. before even thinking about adding a new pair to our portfolio. As far as trading the short term, in and out, go for it...but don't think about it as pairs trading (yet). Just trying to help!! Don