Level 2 Rookie

Discussion in 'Retail Brokers' started by Swoop, May 25, 2001.

  1. Robert,

    If I understand it correctly, Swoop only trades penny stocks. That is the first and probably bigger mistake ;).
    #21     May 29, 2001
  2. no kidding just really dangerous.
    #22     May 29, 2001
  3. Not to sound like the idiot, but that strategy of buying and just waiting can work (IF AND ONLY IF YOU KNOW YOUR STOCK VERY WELL, AND IT IS VERY STABLE) Look at dis, f, t, mo or any of the other stocks I trade a lot. Can you find a time where dis dropped 1.5+ pts and didn't recover at least half of it, or rose 1.5+ and didn't at least drop half of it. On those, you can always just fade the move. As long as you pyramid and have enough bp, you'll always at least get to a break even point if you botch the trade. If you can read the specaialist, you'll almost certainly make money. IM not saying to fade a volatile tech stock. That is suicide. But something very thick and liquid can be faded very well. It's the market's nature to always move then retrace. IN the event of the 5 sigma event that would really move a stock, you have to realize FAST that you are wrong. Im sure many of you will have issue with these statements, b/c they go against everything that you normally accept as true in the market. But can you find me an example of a time where a move of over 10% occurs that doesn't retrace half in those stocks?
    #23     May 29, 2001
  4. Swoop


    Agreed, I'm not sitting on the edge of a cliff with a rope around my head, waiting for a push.

    I do take all comments as a learning opportunity. I don't get into wild up and down stocks. I choose stocks which maintain a mild swing, this mild swing allows time to digest a plan of action. I swing trade a lot, most of my actual day trades involve stocks that I follow and only jump in when they are on a upswing after a dip, never a upswing on top of an upswing. True as pointed out in an early comment, anything can happen overnight, plane crash, law suits, etc. I don't want to sound carefree, I watch my buys and my money risk. I grind out a profit and it will take more months to see if I crash and burn.

    Till then consider me a lab rat trying to get all the cheese he can.
    #24     May 29, 2001
  5. def

    def Sponsor

    I disagree. My point is that the majority of the time you will be right. But even the stocks you mention could bankrupt someone if they do not have enough cash to cover margin:

    If you bought DIS on Nov 9, 00 - you'll still be waiting....
    MO on Oct 22,99 - one month to recover
    T if you bought in June last year - you're loses would still be mounting.

    The strategy does not prevent against gap moves and 5 sigma events usually occur with large gaps where it will be impossible to get out. It also does not prevent against a change in the trend - T is a perfect example if you entered it at the wrong time.

    #25     May 29, 2001
  6. Swoop


    If someone has a week in, week out method of turning positive cash, I'm all ears.

    I can agree with the basic premise that you set with your screens set to your chosen stocks and wait for a run. Jump in with a fast access system, grab some stock, flip over and sell for profit. Hopefully, the stock does not go down the moment after your buy so you can flip and sell. I'm just saying that if you follow your stocks you have a better idea of when they will run, and when it's just a hiccup that would draw in someone not knowing the stock and then burn them when it drops. You can hang on to a known stock for a little while and stand far less of getting burned, than making a bad buy on a stock you do not know and risk hanging on. True, stocks are like women and you can never really get to know them, but you can get a feeling when you should not be in the room.
    #26     May 29, 2001
  7. But on your dis or mo example, or even t, eventually by averaging, I would have gotten to a point where i was at least even, especially if i pyramid, assuming i have enough capital. That's what a lot of specialists do.
    #27     May 30, 2001
  8. If you bought MO in 11/98, you still did not break even. And ... the stock went down 68%+

    Yes it did recover (not fully-still down about 18% from 11/98), but it took a long time.

    I am not saying that you can't make money this way, but watch out. If you have unlimited capital like a specialist, you might be able to average own and get away with it. I don't think Swoop has unlimited capital. If he did, he wouldn't be trading penny stocks (which are far away from the blue chip stocks you mntioned).

    To each his own, whatever works as long as you are aware of the risks, which can spell WIPE-OUT if you are not careful :)
    #28     May 30, 2001
  9. Averaging down and pyramiding? Yikes! I guess it's a bit less harrowing doing it on penny stocks, but still it's the same premise that most traders who got wiped out used when they finally got caught in that one trade that they weren't able to get out of. I suppose if you have the massive financial reserves that specialists and MM's have to move a stock back to where they need it to go, then it's okay to stay in a trade that goes against you. But otherwise you gotta have those stops.
    #29     May 30, 2001
  10. zboy, I know it's scary. Look at mo at that point you give in 98. Firstly, I doubt I would be buying up there with the rsi so high. I probably would have been averaging into a short. Had I bought, It would have been at least 2 pts below the high, as that seemed to be the intraday range around then. Finally, even if i had bought,you can see that there is a bounce up. after that, there is major news on the horizon. I would never hold (and average) into a bad news story. Look at F. I averaged into it most of last week (into one of the most serious drops in the stock ever due to a massive tire recall. As you can see, each time, there were still intraday bounces. I have no position now. But I was able to get out of what turned out to be a 12k position in the end at about a dime average profit on my last scalp which was almost a 1.5 average down. I think it is still possible if you know what you are doing, and can think smartly about it.
    #30     May 30, 2001