Well that wasn't bad for a first day. Mentioned I would talk about stops. Well here goes. When do you use them? Answer: Never. What, SacreBleu!!!Comment ca??? Zut alors.... OK well maybe sometimes but almost never, let me explain. Number one, when I move in on a "day trade" my feelings are usually the same. Yes I check the float, I check the volume, I check the story, and I throw the graph in QCharts. How far has it moved up, if at all....
I start looking at the ticks, and the spread. I go to LII and see who is backing it either on the bid or offer and what is behind it... I can usually do all of the above in about 25 seconds. OK I am ready to move and have a positive NAZ on my side. If it is moving up fast, and I really really want it, I may have little choice to go mkt, else and usually I will go ltd, split the bid ask. Again allocate to about half my position. I anticipate it will drop back at which time I am ready to add. OK so what about them stops.... After all I call "raise stops" all the time. Well yes I do, but they are mental stops. I almost never use a real physical stop unless I get in a position and my dog starts humping my leg, damn I hate it when he does that. BTW if there are any dog lovers that know anything about this particular canine behavior by all means, write soon. OK, so I am now in a position. I usually remind myself that this is a momo and could turn 180 and head south fast. So again I use a mental stop and continue to watch the bids and offers level II. If it breaks my mental stop, I will hit someone on the bid and bow out graciously, but I will keep on the stock to see if I am just headfaked. Often a trader gets goofed, and seconds later, boom the stock starts behaving normally again. So I am always ready to admit defeat in the battle but not the war. I will jump right back if I feel I got hoodwinked out of my shares by a MM who thinks he's smarter than me. So why no physical stops, cause stops are orders and orders can be seen, and may be just too tempting for a MM to take. Easy pickings for them, so why not. OK so now we are in a stock it is moving up, I usually like playing these at the end of the day as it is easier to sell afterhours in what we affectionately refer to as the casino. This is where you can usually have some fun as there are no MMs hanging around to spoil the party. I often will wait it out to get the high then short the same issue and sell on the retreat the next morning. Else its in the middle of the day and I will have a 2 pt trial stop and raise it as the stock moves north. Eventually I will leave the position, but that depends on some of the points I made above...
Next topic, I will talk about is "the next morning".... When to sell into the gap, and when and how to buy, and when to avoid, also triggers and candle sticks, and break out points and head and shoulders, the graphical representation not the shampoo....
Stick around, lots more to come...
Trade smart...
Sharck |
