|
PureBytes Links
Trading Reference Links
|
Linda,
I empathize with you. Getting a handle on my emotions has been a major
obstacle for me. I've recently adopted the opinion that I *can't* remove
opinion and emotion from the process, and I doubt if anyone can. I've
had problems coping with the stress, too. I've found that paper trading
helps me in that regard.
As to Len's email, I have to side with Ira on this. I disagree with
pretty much everything Len said except his first sentence and his last
sentence:
>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.
In other words, I think Len's right; I just think there are better
parameters, guidelines, and rules to follow. Sorry Len, no offense.
(Actually, I'm more interested in what the bond traders' responses to Len
were!)
Here's something that hit me right between the eyes, as I was struggling
with the issue of stops and fib retracements, and volatility, as you are
now. I just have to accept the volatility. That's it. It's a
deceptively simple concept, but I never was able to grasp it until
recently.
Good luck,
Ed
Persistence and determination alone are omnipotent - Calvin Coolidge
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
|