SL is stop-loss - an order set at a price at which your position will be closed to prevent further loss. Always always use a SL. TP is a take profits order - an order set to close the position in profit and avoid any future loss of profit. Use a TP if your strategy and TA demand it. Use a TSL, trailing stop-loss, if appropriate to the strategy; this in some ways is a hybrid of both SL and TP as it could be triggered both in profit or in loss and stops price moving any further against you.
Tomorton, thanks. Now I feel like an idiot lol. I know what the terms are, just didn’t know the abbreviations, didn’t connect the dots. I’m a former (retired) Financial Advisor but never really traded for clients, did asset allocation and planning. I traded for myself, but in an admittedly amateur way. Trying to learn.
What’s the alpha or risk premia you expect to capture? That will define your time horizon and trade duration. If your idea of swing trading is buying dips in an upwards trend, then you should know that the strong indicator of momentum is between the 6 month (~120 day) and 12 month return (~250 day). Most professionals will look at returns on a cross sectional and time series basis, and will lag the measure by a month (if looking at single names) due to the short term reversal factor.
Interesting; Sounds like you spent years doing that. Do you think that your training as a financial advisor will help? What do you think you will have to unlearn to become a successful trader?
good question. The biggest fight I have with myself is learning to resist buying stock in a good company that gaps down, and also, learning to lose my fear when buying momentum, high p/E high growth. Perfect example, UPST. Made money once, then screwed it up getting scared out twice. Now I’m afraid to buy it again.
There is quite a difference between a good company and a good stock. I quit following the fundamentals of a company because it tended to bias my trading. Knowing that a company had solid fundamentals kept me in some trades I should have exited, tied up my capital that could have been employed with other opportunities. What is that you are afraid of? If it's having a losing trade I'm afraid your doomed as a trader.
Just that the stock is super volatile. I’m not smart enough yet to recognize a good setup. If I am wrong on BMY I’m ok with that, if I’m wrong on UPST, I’m down 20 points the first day, with the stock up 600% YTD. it just takes getting used to. I’m not afraid to take a loss, I’ve taken a number of them, in September. Kept them small. It’s taking a bigger loss than I’m comfortable with that scares me. Like I’ve said, I’ve got a lot to learn. One of the reasons I’m here. Exploring the forum.
At what point does a loss become uncomfortable? And what do you do when it gets to that point? Believe me it will eventually get to that point through no fault of your own. Why are you OK being wrong with a good company? Look back in history at the good companies that have fallen on tough times. GM comes to mind. I know I've held a few over the years until I changed my strategy.
I don’t like being down more than 10%, preferably 5-7%, on a trading position. I do look at fundamentals, and you have a point. The thing is, you never really know if a good company is really a good company. Worldcom, Tyco. And those disastrous frauds aside, as someone here said (I think it was you) a good company is not necessarily a good stock. Before I was in the business, I bought a great company. Ticker was CSCO. But I paid $174 a share . Great company, crap price. I always worry, among other things, that the market knows more than I do. (Which it usually does) don’t know if I’m making sense, just my newbie thoughts