OK, men. Here's the plan.

Discussion in 'Trading' started by Mr. DNA, Oct 11, 2002.

  1. Mr. DNA

    Mr. DNA

    I did this with NXTL on about 40 trades and was able to achieve a correct execution on about 33 of them.

    Use a stock in the 4 to 6 dollar per share range.
    Nextel is still good but it costs about 8 bucks now.

    0. Get into your position based on your set-up plan. You know the routines. You have all read your manuals. This part is easy to do well if your have done your training.

    1. You will place your stop order immediately after getting into your position. You will have 5 seconds to place your stop order.You should be able to do it in 2-3 seconds

    1.a Place your stop at the purchase price and be prepared to lose your commission your commission on every trade. Think of it as the entry fee.

    2. Do not be tempted to place your stop at your break even point, even two cents higher than your entry, because, as you wait for it to get there, it is very possible that the bid may drop. You will be getting out of this trade using a trailing stop. You will be watching the bid very closely as a trailing stop is always a market order.

    Now one of two things will happen:

    a. You will stop out and lose your commission.


    b. Your position will increase in value by a 2 or three cents.

    3. What will not happen is you will not find yourself holding a negative position. And that must never happen. If it does you will sell your position with a market order immediately. Don't even flinch. If you are going to fail, fail quickly and get it over with.

    4. OK, good. Now you are positive by a few cents. this is where you just have to get the feel of it so you don't lose your couple of cents and stop out. Which is what will happen if you don't sell quick enough when you were supposed to. Be ready to sell at any moment. This entire trade may only take a few seconds. Be prepared to take a two or three cent profit if you have any doubts about the safety of your position.

    5. Now, Here is where you have to balance the amount of profit you hope to make against the probability of it actually happening. Do this using a combination of Technical Indicators, News, and Intuition.

    6. 7 .8. 9. Again be sure your stop is in place. There is no net out here to catch you if you fall.

    in this trade you own 1000 shares of a 5 dollar stock.

    Cheap stocks are better because you can make more per investment dollar.

    For example:

    Note that it doesn't matter what the price of the stock is. A one cent move is a one cent move irregardless. Just multiply the number of shares by one cent.

    1000 shares of NXTL at 5.30 will cost $5300
    1000 shares of NXTL at 5.40 is worth $5400 = 10 cent move = $100 prof
    1000 shares of NXTL at 5.50 is worth $5500 = 20 cent move = $200 prof
    1000 shares of NXTL at 5.60 is worth $5600 = 30 cent move = $300 prof
    1000 shares of NXTL at 5.70 is worth $5700 = 40 cent move = $400 prof
    1000 shares of NXTL at 5.80 is worth $5800 = 50 cent move = $500 prof
    1000 shares of NXTL at 5.90 is worth $5900 = 60 cent move = $600 prof
    1000 shares of NXTL at 6.00 is worth $6000 = 70 cent move = $700 prof
    1000 shares of NXTL at 6.10 is worth $6100 = 80 cent move = $800 prof

    but I digress,

    10. Go for a ten cent positive move on your position.

    11. When you hit ten cents positive on the bid, Cancel your stop order. Place a trailing stop two cents below the bid and let it ride out.

    IMPORTANT: You will not want to do this. You will think "I don't want to stop out on a ten cent gain. This position could make more."

    That is called greed and it will cost you your ten cents. Just like in the beginning of the trade when I said "Place your stop order immediately after getting into position." If you did not place that stop it was because of the greed of not wanting to lose your commission. The risk here is placing your trade in a state of incorrect execution. Do you want that?

    Me, I'd rather tip the ferryman than throw my coins on the river.

    That's right, Cuz they gonna sink.

    This is a system with rules that are not to be broken. Control your emotions. Do not let greed get you. Pay the ticket price and be humble in the huge like totally awesomeness of the market.

    Now get out there and scalp.

    Wax and Milk those Squares.


  2. If you place your stop at the price you were just filled at, don't you get stopped out almost 100% of the time?
  3. Mr. DNA

    Mr. DNA

    Yeah, I guess I wait until it moves up two or three cents first. but
    do get stopped out almost half of the time