ok, i'm back, been otta commission for a week due to cable probs.cable is finally up and running for those who missed me...checking my pm's i guess that was nobody, lol!
wang,
in one of your posts you address shorting a 3 day move up of 30 pct and adding to the short position if it finishes higher in the following days...how do you do that if you immediately go fully margined as you've stated? seems you have conflict to your strategy there,in consideraton of your strategy, wouldn't it be better to take half of a position initially?
second, not developing your trade plan before entry seems to me to be very dangerous, almost amateurish for daytrading/short term positions. at some point, this allows the emotion of a position to enter the picture by not having a target/exit strategy. many books on trading discuss this topic at length, its at least been my experience when i don't adhere to my plan, or didn't have a plan, i don't know what the basis is for an exit and losses become worse.
you've stated several times, that time will tell, once the criteria for entering a trade are no longer valid it would seem "time" to get out, this may be more of a technical approach than you use(in an indicator based system, once those indicators no longer support your position, for example). you've also mentioned you hope you don't get called on margin. this is another situation i think you should look in to. am i correct in assuming that you are fully margined meaning that you are placing your entire equity into one position? and if so would 3 margin calls wipe out 45pct of your equity? which would indicate, you would have to gain 100pct thereafter to make that money back? again, many books address money mgmt as an important aspect towards the longevity of this as a career. the amazing thing i have found from these readings is that most "professionals" don't risk more than 1pct of equity on any given trade. having targets and exits allows you to determine the risk/reward aspect of a trade as well as limit your trading size based on a "worst case" scenario. the risk reward scenario coupled with the trading size allowed assist in determining whether the trade offers potential or not, even though you are only risking 1pct of capital at a time, sizable gains are still achievable. i trade alot on margin myself, but i will never allow a trade to be called on margin before getting out. if i'm wrong, i'm wrong. i don't allow the broker a chance to tell me i'm wrong and force me out. personally, i think its too big of a loss to take on one trade. how many margin calls have bounced after you got forced out?
i used to pick my positions by fundamentals alone. what drove me to learn ta was the fact that i could pick a strong fundamental stock, only to see it correct itself before going up. john murphy in his book the "visual investor" presents a story about how he could look at the charts trend and know the fundamentals, much more quickly than a fundamentalist could dig up the results.i'd be curious if you would post a link to the fundamental guy you mentioned, just to see his approach.do you have a link?*(if its based on pe, i'm gonna puke, but that's another story!). i would probably agree with your ta/fa blend, taking an example...if news that would impact the fundamentals of a stock can be properly intrepretted real-time and acted upon it may beat the technician who checks his charts that nite.however, in many cases that i have seen, there are footprints left on the chart in advance of a news release or fundamental change. i've seen it too many times to discount now by the means of scan hits that i get each nite. this also kinda ties into doug's statement you referenced. what he means is, as an example, if a chart is breaking down on a fundamentally strong stock, then that should be paid attention to, such as the loss of a trend. it often will be the precursor to bad news that is coming, often earnings warnings. the news is well known beforehand and the activity of the chart reflects it as people "close" to the company start liquidating positions. so i have seen times when proper ta will lead fundamentals.
don't take this as criticism. these are just some of my experiences from what i have learned from my research and trading. by no means am i a guru, but alot of what i am presenting has helped me.
milesov |
