It is all a function of your purpose in getting into a trade, your objective. As a swing or position trader, you definately look to take stocks home at times. What we are referring to here is day trading. By definition, the word day implies intra-day. First off, there are a relatively few number of books relating to intra-day trading. I think people have stated that Houtkin's book was one of the better ones but has perhaps become somewhat outdated as SOES trading has lost its glamour. One of the best source for trading strategies and thoughts regarding trading are some of the various such as these threads, elite trader, etc. Do I know or can I reference you to specific languange in a book that says no, offhand? No, I can't remember the last time I read a book on trading. Most of the time I speak from experience from talking with other firm traders, mm's and other market participants. But scour these threads, read what some of the strategies some of more knowledgeable traders employ, most will say DONT TAKE THEM HOME. You can't predict a cabletron, westerdigital, a oxford health, and ifyou are a shorter term trader looking for the 2, 3 4 points or a day trader shooting for 1/4s and 1/2s, you cant not handle a 6 point cabletron loss. I am sure someone on the thread knows of "specific references" and I am sure you will see certain themes pop up time and time again.
The person who took home INTC last night and is now out 3 1/2 points got a little more than the follow-through strength they were looking for. As a long term investor, you could not have made the 100+ points intc is up in the last 16 months or so if you didnt take these risks. Thats long term investing. Yet it takes a lot of 1/4s and 3/8 to make back the 3 1/2 points.
On market surges where the market moves higher and higher trades become abit complacent and start taking them home. Some start to expect the market to do the same thing the next day. Absolutely, the market moves in herd like movements but it often does not do what you expect.
As a day trader, you are not betting the long term, overnight movements ofthe market. You are buying xyz trying to make you xx profit on it in xx time. Deviate and you have lost discipline.
Yet as the market moves higher and higher leads to a greater chance of a short term pullback, like today.
Regards,
steve |
