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Your system is wonderful and may suit your parameters as an investor. They do not
meet mine as a trader. In your scenario, you can have a stock meet all of your
criteria and not move. It will continue not to move as long as it doesn't have a
following of advisers and brokerage firms that sponsor it and follow it for the
funds and their clients. I don't have time to read all the news, research
reports, published information and other misc. data concerning a firm. I have a
program that will allow me to enter all of your parameters and filter 9000 stocks
and list those that meet the criteria. Once that is done, you have to select the
ones to invest in. Notice the word INVEST not TRADE. Unless you are a bank, fund
or trading group, you do not have sufficient funds to invest in them all.
Somewhere along the line you have to select a stock or future to invest in or
trade.
Everything that is known and many things that are not public knowledge are
reflected in the stock or futures price. Every stock and every future is fairly
valued at any specific time because you have a buyer and a seller at that price.
It may be overvalued or undervalued using other criteria, but the fact remains
that the seller feels he/she got a good price and the buyer feels that he/she got
a bargain. All the fundamental factors can be in your favor and if price goes
down and you are long you will lose money. In know the old adage, I haven't lost
anything because I haven't sold it yet. Your strategy doesn't allow for a short
sale. In surveying the stocks I track there are more trading at their lows then
those trading at there highs.
Everyone has a different trading strategy and different psychological needs as a
trader. Yours are good for you and maybe many others. It might even be good for
me if I change my trading style and requirements. I doubt if your style will
produce an income on a monthly basis to meet the bills, in all types of markets.
Thank you for the information and good luck, Ira.
Len Olson wrote:
> Linda: FWIW,
>
> I do not think that a hard "system" is very useful anymore. Primarily
> due to the volatility of the market right now, and secondly, the immense
> dowside pressure that is cooking inside of the internet bubble stocks.
> I think it is more appropriate for a person to say that they "follow a
> set of parameters and guidelines."
>
> My first couple of posts basically explained my philosophy, (and
> received a lot of interesting responses from the bond traders).
>
> I agree with you that having a position overnight can be worrisome,
> unless you have done your homework.
>
> 1. Due extreme research to the point of exhaustion. Find and evaluate
> every piece of financial, company and market data you can find. Doing
> this will identify co's of value that have minimal downside risk.
> Apologies to everyone else, but I'll repost my basic criteria for Linda:
> a. P/E below twenty, I prefer 10 to 15 (avoids pie in the sky and
> balloons),
> b. D/E below .5, I prefer under .3, and always avoid anything above
> .7, because debt strangles at that level and revenues become earmarked
> for debt retirement and the lender becomes the boss.
> c. P/B below 5, I prefer to be below 3, I believe that a price for
> stock that is over five times its underlying book value is simply
> overvalued raising the risk of downward pressure.
> d. Growth rate: between 7 and 18, anything below that shows slow
> growth thus slow revenues, price appreciation, etc, anything above that
> may be too fast for companies to control and may also be indicative of
> an abnormally good year (i don't want a stock that will show a decline
> in growth rate, i.e. stock plunge,
>
> 2. Comprise a list of stocks that you believe are actually worth the
> current price at market OR are descending to a price point that you
> believe in. In other words, stay away from the stock de jure. Always
> avoid stocks at play, (mainly because that is the point, they are in
> play now, you missed it). This note is what the true "day traders" do,
> and it is why most of them perform poorly.
>
> 3. The list should include at least three to four different industries
> and sectors. I like energy, finance, retail, and airline. These four
> tend to alternate between up and down momentum.
>
> 4. Look for stocks that "roll", daily, weekly, monthly, etc. Please
> note that most people commonly misapply the term "roll" with "cycle" A
> stock that cycles does so seasonly and usually on an annual basis.
> Rolling stocks are those that stay within a consistent price and volume
> range. The word consistently cannot be emphasized enough.
>
> 5. Buy stocks that have consistent daily price action, (I like a 3 to
> 4% total swing), and stock that have strong volume, (I look for volume
> of 2 to 4% of outstanding shares.
>
> 6. Consider the market conditions in two ways: One, the overall market
> strength in the broad sense (DOW, NYSE, NASDAQ), Two, form an opinion
> about your particular industries and sectors by looking at index
> information, i.e. transports. I also pay great attention to the
> advance/decline line, and right now it concerns me.
>
> 7. Each day consider the news of the world situation in terms of news,
> and find out how the overseas markets are doing.
>
> 8. Each day narrow your list to three or four of your picks that show
> the most promise for the day.
>
> 9. Spread your capital between the stocks
>
> 10. Set a price target for purchase, (be patient and wait). Then, set
> a price target for sell, (and do it when the price comes your way)! You
> can second guess yourself to death on lost profits. Who cares, YOUR
> price was met, you sold it, and most importantly, you put it back in the
> bank.
>
> 11. Set price levels to get out and close on the downside. The only
> time you should ever average down is if the particular stock is one that
> you want to accumulate due to large pending news/performance. Of my
> twenty or so stocks, I only have one which is HAST. It is the only
> one. Just a few days ago, I bought PESC when it went more than 1.25 off
> of NBR (the acquiring co.) When it slid to two off I sold for an $800
> loss. I'm glad I did, because it has continued down. Today, an analyst
> was on CNBC
>
> Knowing this will bring on a tyrade from the "systems" chart guys, I'll
> say it anyway: Charts and programs can be a tool, but you have to
> research and think about why you are buying. Linda, we all worry about
> capital preservation. Afterall, if we lose capital, we can't make money
> in this. But, I think that if you will concentrate on parameters,
> guidelines and rules, your anxiety level will go down and your long term
> performance will be consistent. A grain of sand each day.
>
> Okay, I'm ready for the replies.
>
> > Linda Swope wrote:
> >
> > Hello RT's!
> >
> > I'm starting to trade again, this time systematically. Emotion and
> > opinion are gone and I'm just trying to trade price.
> >
> > I'm struggling a little with time frame. I've day traded a lot and
> > the stress takes a toll on me. Part of me would like to position
> > trade with a short time frame (less than 1 month), but another voice
> > warns me of those overnight surprises. I think I would have to set
> > looser stops to handle the volatility and not get kicked out with
> > every whipsaw.
> >
> > I'd like to set up a possible trade and then get your feedback:
> >
> > My system is based on fib retracements and Dell is sure retracing! I
> > figure there are 2 choices: 1)It will bounce off the retracement and
> > resume the uptrend. 2)It will start a new trend and go lower. At
> > this moment it is oversold, so that gives me two choices. 1)It will
> > resume the uptrend. 2)It will re-test the high before a new leg down
> > and a new downtrend. That says to me in the short term it is going
> > higher.
> >
> > So next I need a signal that it is indeed going up. Then I set my
> > stop at the low of this retracement. Then I set my target based on
> > fib ratios. (I'm conservative and use 1.618.) Now I just let the
> > price happen and either I'm in or out.
> >
> > Here's a couple of questions: what would you use as your signal that
> > it's resumed an uptrend?
> > Would you use the after-hours low or the trading day low for your
> > stop? The after-hours low is a couple of points lower than the
> > trading day low.
> >
> > And just generally speaking, am I on the right track?
> >
> > I really appreciate any comments, feedback and wisdom you all might
> > share!
> >
> > Swope's Mountain Photography
> > http://www.swopephoto.com
> > linda@xxxxxxxxxxxxxx
> > Climb the mountains & get their glad tidings: Peace will flow into you
> > as sunshine into flower; the winds will blow their freshness into you
> > & storms their energy, & cares will drop off you like autumn leaves.
> > John Muir 1838 - 1914
> >
> >
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