Trading 1 stock only?

Discussion in 'Strategy Building' started by Pekelo, Mar 27, 2007.

  1. Pekelo


    I wonder, are there traders here who get to know 1 stock only and trade that all the time?

    There are a few big companies with stockprices in a clear range, really easy to trade. No big winners, but no big surprizes either.
  2. gnome


    If you don't give a crap about the fundies (and you shouldn't if you're a technical trader), you wouldn't have to restrict yourself to ONE stock... maybe 10-30 stocks which you could follow easily.

    Then, make BIG plays on setups with appropriate stops.... a totally legitimate trading plan.
  3. Pek

    I used to have that strategy. I would only trade tech stocks..mainly the semi's. But that was awhile ago, and now I trade anything (more opportunity )
  4. Defeats the whole purpose of TA

    TA's big advantage over FA is that you can trade instrument by identifying the setups fairly quickly

    Whereas it takes so much more time to do FA on every single stock
  5. Pekelo


    Well, I was thinking more of a lazy swingtrading, holding it for a few days when a stock is channeling.

    The problem with more stocks at the same time that you diversify, thus more commission, more energy, and even if you have 1-2 good moves the few very slow moves will bring down your average return.

    Now I am not thinking here anything crazy, just a nice comfortable 20% annual return...

    One stock that I follow is GSK. It has been channeling between $54-56 lately but with a little stretch for more than 10 months. So anytime you bought below $54 and shorted above $56 you just had to wait a few days, usually not more than 2 weeks and you made 3-4%. Repeat that 10 times a year....

    Last year it bounced between those values 10 times in 6 months...No thinking was needed, just patience....
    (this year it has done it 7 times in 3 months)
  6. gnome


    That's EXACTLY what I'm talking about!!

    But you don't have to limit yourself to one stock... you can follow a number of them which exhibit those characteristics and have sufficient daily volume to let you play without excessive slippage. AND you don't have to diversify all that much if you have stop discipline. It's OK to "put all of your eggs into one basket" so long as you WATCH THAT BASKET!!
  7. Being diversified will also keep you more entertained, which is a good thing, because when you get bored, we tend to impulse trade.
  8. Slippage is a worry if the position size is more than 1% of a day's volume.

    Also there is the inherent risk that if something screws up, you lose 30% of 100% instead of 30% of 10% which works out to 3%.

    My wife freaks when she sees the statements and I scream at the screen a lot, too. You find yourself eating Mac and Cheese a lot, as well.
  9. mnx

    mnx ;) hahaha ever see that commercial on CNBC??

    could you do the same thing with options to increase your return? The only problem with that is strikes are no less than 2.50$ apart (usually 5$) so it might not bve worthwhile... I suppose stocks that are rangebound have crap premiums too...

    on another note, I have a couple stocks which I daytrade every day now... I used to trade different stocks every day, but I kinda like sticking with a few staples...


  10. Pekelo


    A few weeks ago it went higher reaching $60 (short, short,short!), but some bad news about a diabetes drug took care of it, and it dropped below $53, currently around $53.3....

    So it is a buy now....

    By the way the whole point of this thread was for lazy swingtraders. I personally don't care to look through 100s of stocks everyday. So just get to know 1 and play it according to its behavour...
    #10     May 24, 2007