Maybe ours lines got crossed, if so I'm sorry. I'm more of a swing trader than day trader so to speak. I focus on about twenty stocks day after day, and develope a feel for when it will run. Sometimes I buy in the day or two before the run. Sometimes I wait till that morning to see a little trigger in the stock and I jump in before the main move. At worst when I've made a bad decesion I hold for maybe 10 days and it goes back up, because I traded on a stock I've watched everyday. I changed to this style a month ago and have not had any trade losses. I don't watch lots of stocks to see a run and then jump in and out, true that is very hard to make money in the long run. Stocks are not magical, they go up and down by the forces people put on them. Anticipate the public reaction before they react. Check any stock and look at its chart. You will see ups and downs, catch it when its down and sell it when its up. I'm not trying to be funny, but stick to the basics and you will profit, " Buy Low, Sell High ". The rest is just advertisement ploy to get your commissions on trades. If you study your charts you will see when you buy low, it will come back up. That is not true of bad stocks, but that shows in the charts too.
Are you saying that you don't use any stops at all and whenever a trade goes against you you just hold on hoping it will turn around? If such an approach works for you over the long run more power to you. But for me the key to consistent profitability and making a very comfortable living trading has been strict risk and money management.
When I study a stock on a day by day basis, I know just about when it will go up after a dip, sometimes it takes an extra few days to go back up. I don't worry that much about a long term loss, it would be rare for the stock to keep slipping with out at least once having a short run back up past where I have got it on the dip. I'm not saying I'm great, anybody can do it. You have to put in the time every day to study your stocks so you learn how the public reacts to that stock. It may take a week or so for the stock to come back down around it's support, but if you follow about 20 stocks daily you can always find one or two of them to buy like that every day. Is this the Holy Grail, no way, but with daily study it works for me.
swoop, You are way out of my league, out of your mind, or both 10,000 share swing trades with overnight risks and you are worried about a fraction of a cent. How about a 50% gap open??? 10-40 points gap on 10K shares ... get my point. I am curious to know who you trade with and how you route your orders for 10K lots. Obviously, you are trading big sizes without direct access. The cliches you use in your posts are absolutely great, but I would be interested to find out where you will be six months from now. I don't know much about the market, but I do know that risk management is what it is all about. YOU ARE TAKING HUGE RISKS. Luck does run out sometime. Just my two cents worth(less). I also remeber that you mentioned in one of your posts (before you edited it) that you were long 11,000 shares of a penny stock that you sold for a big profit. I'd be curious to hear more about that trade. Obviously, you got me all confused
Study the stocks you want to trade, like anything else in life, hard work equals success. Do you trade the same stocks, or jump around on what's hot that day. I like to know my stocks, or at least fill I do. High volume, low beta, and really tracking a stock to get to know it helps me buy at the dip and most times it goes up the next day. I am a believer in Bollinger bands also. I get big fills because most of the time I'm catching the stock before the run. I'm not talking about huge runs, thats why I but large amounts, when the stock takes a run I'm ready to go flat. Maybe I have been on just a fantastic run of luck, 6 months from now I will know if I'm on to a good thing or not. Those 11,000 shares of penny stock I sold the next morning for $810 profit after the commission. I'm here, like all of you, to learn from any of you on how to trade better. We all would like to have some extra cash in the bank.
Swoop wrote, "I'm here, like all of you, to learn from any of you on how to trade better. We all would like to have some extra cash in the bank." Amen! Can you share with us the stocks that you trade all the time. If you don't want to share this information, because you fear it would hurt future returs, I completely understand. Thanks
swoop, I believe your style is a bit like selling out of the money options in terms of risk. Maybe 99% of the time you will win(never mind the opportunity cost of sitting around and not trading while you sit around and wait for a loser to become a winner). However, on the rare occasions when a fundementally sound company like a MSFT, GE, PG, CSCO etc comes out with a profit warning and the stock gaps down >10%, you will be sitting on a huge loss which could far outweigh your previous gains. Worse yet, if you are trading on margin and do not have enough cash to meet maintenance requirements, you'll be liquidated. My only advice would be to make sure you are keenly aware of how much cash you can lose when a stock runs against you.
Good point. I do not intend to take a large loss. I've been to casinos enough to see people ride a bad streak off a cliff with no bottom in sight. If the stock I traded takes a big run, I back off of it for a while to let it stablize a little and get back in its support structure again. Over time I will get burned on a stock if not careful, that time has not come yet. I try very hard to get a feel for those stocks so maybe it helps minimize the down side.
SWOOP The posts above have caught my attention Def saw it and so did others. You are trading with unlimited risk when you don't have a stop in place. 10,000 held for a few days thinking it will come back is nuts. There are a lot of stocks that never recover when they get hit. The problem is technology changes, what was high tech now might not be in 6 months from now. What if? That is the magic question. The best traders are willing to be wrong. You can fight us about this and using stops. I can show you about 40 traders on Clearstation who did this with me. I can also show you 40 traders who are no longer trading on clearstation sitting with huge losses. What would you do if the stock had an accounting error and lied about profits. CEO and a few of the tops Executives were all killed in a plane crash? Patent infrigement and a huge lawsuit comes out that destroys the company? I think a great EXAMPLE would be EMLX. When the Hoax came out from that 22 yr old. Can you withstand a 50% drop in price on 10,000 shares? If it happened once it will happen again. When someone says something can't happen in trading it means they are ignoring a vital aspect of trading. The market will go where nobody feels it can go. There are lots of risks you are taking. I'd heavily rethink your trading. It would be quicker if you just split up all your trading capital amoung all the members of this trading board. I have a feeling in a few months or years you will wish you listened to me. Rtharp
You don't need to have much imagination to see what could (and ceartainly will, sooner or later) happen if you don't have a stop in place. You just have to look at the charts of any technology stock during 2000 and early 2001. Take a look at CMGI. You could have bought it at 150$ and kept it ever since, waiting for a recovery. How would it feel to see 1.5M dollars turn into 50K dollars? Take another look at WCII, do I need to tell you more? If what you think is that it won't happen to you, all I can tell you is think again. All the best Guido