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Hi Len,
With all due respect, if you are engaging in nothing but daytrading and
speculative position trading such as that you describe, you are wasting your
time reading SEC reports and poring over fundamentals. That information is
for long-term investors.
Initially it was hard for me to make the transition as well, but currently -
aside from reading as many news blurbs as I can before and just after the
open to determine which stocks are in play - I rely entirely on a very
simple form of technical analysis which incorporates nothing but price,
volume, and a filter or two. With all the manipulation by market makers and
our breed of trader (which last I read, was estimated to be 5 million
strong!), if you want to be successful, you have to forget about the fairy
tale concept that fundamentals will move share prices regardless of time
frame. Buy some books with time-honored success, common sense, and
simplicity to the approach (Joe Ross and Mark Cherlin have recently
co-authored several like this - I have read two of them, and they are
excellent). You will not regret the few hundred dollars that books such as
these will cost, as it is an investment in your future.... not to mention a
tax write-off at year-end if you qualify for trader status.
I use the term speculative above, as your NBR trade could have JUST AS
EASILY turned around and left teeth marks on your posterior. Trying to
pretend that you are "smarter than the market" is one surefire way to lose
your trading capital - trust me, as I suffered from a similar delusion
previously. Market inefficiencies exist because of short-term manipulation,
pure and simple. Study the recent examples of BAMM, AAGP, DLIA, etc. and
the current situation with JBOH for your own confirmation. The sooner you
can accept this most basic tenet of short-term trading, the more likely your
success as a trader.
Happy trading and best regards,
Paul Szilassy
-----Original Message-----
From: Len Olson <lto@xxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Wednesday, February 03, 1999 3:34 PM
Subject: GEN: Hello, Who I am
>Greetings to All:
>
>I am new to this forum and wanted to introduce myself.
>
>Like alot of traders, I am a disillusioned professional who wrestled his
>money away from a traditional broker a few years back. I found out that
>I pay more attention to my investments than he ever did. Result, I now
>do better. I like to think that I have made every mistake in the world
>when it comes to trading. Of course, that is not the case:
>
> Here's an example: I bought NBR on a Thursday about two weeks ago based
>upon my belief in the company and the fundamentals, regardless of the
>analysts. I had trouble getting to sleep that night. In the morning,
>my brother brought me out of a daze with a phone call at 8:20 central
>time and said "NBR gapped up 3/4". So i thought man I need to trade.
>(I'll take a .50 profit in less than 24 hours anytime). So, I stumbled
>out to the office, turned on the PC, and tried to sip coffee while my
>vision cleared. As soon as I was logged on, I went to the trade screen
>(WebStreet). What I didn't understand my brother to say was that the
>stock gapped up 1 1/2 to 14 3/4. Well, I got a little excited, (vision
>still blurry, still medically asleep).
>I placed my order. I received a notice that my order had been
>received. (When a stock gaps up like this, I usually place my sale at
>the current bid to move it). This long story shortened: I forgot to
>change the trade to a SELL from BUY. I ended up buying another 1000
>shares at 14 11/16. Thankfully, I did sell the first 1000 at 14 1/4,
>and I was able to average the second 1000 down at breakeven. I lost a
>$750 opportunity, a gift.
>
>I track approximately 20 stocks religously spread between airlines, oil
>services, retailers, and technology. I steer away from e-commerce
>companies unless based upon solid brick and mortar operations. I will
>not trade a stock unless the fundamentals and SEC filings are 100%
>solid. I do not give alot of credence to analyst, because they are
>driven by other factors and influences which IMHO tend to stray from
>true basic analysis. Here are some of the things that I look for:
>
>P/E preferably 10 to 15, up to 20
>D/E under .8
>SEC all filings on time, without nonsense
>Mgt in line with business experience and business plan
>Growth between 12 and 20%, less is insufficient, more is probably an
>anomaly or at a minimum posing problems for continued expansion
>Price between eight and $22
>
>The most important factors for me are daily price action and volume.
>Price action provides the opportunity to take advantage of daily highs
>and lows, and volume provides the ability to sell a stock. My average
>holding period is 1.3 days, and my average profit margin is 1.6%. I
>like companies that do not have alot of news but show consistency. I
>generally trade in blocks of 1000 to take advantage of small moves.
>However, I have been known to take larger positions and wait. I am
>currently tracking ALLC, BJS, NBR, PESC, CD, KM, HAST, RMDY (which I
>should have trusted my instincts on), TWA, PAIR, and EVER.
>
>My goal each day is to select four or five stocks to play. I attempt to
>make 2% in each roundtrip. If you are about to make a mistake, I have
>probably made it. I truly appreciate educated criticism and
>suggestions. I call my approach "Grain of Sand".
>
>Take Care
>
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