You're right. O'neil does use some technicals, such as the 10 week MA. But the canslim model is mainly based on fundamentals. That, to me anyway, is investing. Traders (in my humble opinion) are more short term, use price action and charts, as well as math, and don't care about fundamentals. I, for one, don't even care about what a company does. If a stock is up 10% on the day and is trading 5 times it's normal volume, the last thing I'm going to do is start doing research on it. I'm just going to trade it. Also, using stops and targets doesn't make one a trader. Investors use those as well.
I was curious as it seems to be a pretty fine line,but everyone has some sort of distinction.. Canslim,IMHO,is really Momo trading with some vol filters..Definetly has fundamental filters,but they don't backtest that well.. What would you call an individual who sets a 1 ATR stop,never sells above 50 day MA,and is lucky good and catches a 300 percent move?? Would the holding period be the deciding factor?? Do you follow Kullamagi??
I'm not sure holding time is a factor. I remember Jack Schwager and Jim Rogers having this discussion in Market Wizards. Rogers claimed to be an investor since he would hold positions for years, but Schwager called him a trader because he occasionally sold short and was concerned about market direction rather than choosing stocks which may out perform the market. Yes, it's a fine line, but it also seems they overlap. I'm obviously a trader, but now I'm thinking the distinction doesn't really matter when it comes to longer time frames.
It depends, since we are out of quotative easing-QE, I only look for day trades on specific company names. If my stocks are regularly trading ranges in $6, $10 or $20, than for me its .50 to a $1.00, no more, if you are into sitting long term than start looking at cycles and buy and hold on the low end of the cycle range, otherwise your swinging with higher loss %'s.
I like this guy's interviews...very easy entry setup...SL set at 20% of position. I think a tight stop is poison to longer duration traders.
Agree. Shorting does feel specific to "trading" and not investing...but on the other hand, if you put money into a Long/Short fund you would certainly consider that an "investment". Even Buffett, the embodiment of "investor" sells a stock when the fundamentals or competitive landscape changes...sounds like a position "trader" to me.
You are overcomplicating things for yourself. Books are fantastic and O'Neil is great but you cannot go by the book on everything. Stock prices change over time and you need to be flexible. What type of trading are you doing? If you are day trading you need to set your SL and TP based on historical data, what the stock opened, closed, peaked, and valleyed at yesterday, and however many days prior that you wish to take into consideration. You also have to consider pre-market and after-hours prices. The problem with setting SL too tight is that your stock might decrease a bit as a matter of routine, and so you might get kicked out of the trade when you should have rode it. Now you have to wait for your funds to settle and you might have problems with PDT rules. Some stocks open high, decline a bit for a sell off, then recover and increase, so you need to familiarize yourself with the stock's pattern. Unless you're just doing a MOMO. You need to learn by doing, develop your own systems and strategies, and not try to stick to a mathematical formula you read in a book.