Re: Day Trading.
Alohal, excellent post. I believe you are onto something here. While I mostly buy and hold, I allocate a small portion of my funds to the strategy you suggest, which I don't consider to be day trading. I look for fast moving, quality stocks that have been hit by a market downdraft. If/When they get far above their 50 day moving averages, I hold my breath and sell. I've done this with success with SEEK, XCIT, and RNWK. The only drawback to the strategy is I leave a lot of money on the table, but if I get handed a 50% to 100% gain in a short period of time, and a stock is far above its 50 DMA, I get out. I roll some of the profits into long-term holdings such as Dell, MSFT, and CSCO.
If upward price movement is steady, rather than quick, and continued good news is coming out, I'll do more investigation and consider holding a portion long term.
One additional note -- I've found it most helpful when buying one of these fast moving stocks to determine the price at which I would sell within the next few weeks, and place a sell order for that price. Often the intraday movements are large enough for me to get out, and I don't have time to follow the price movements throughout the day. This also protects me from getting greedy and waiting too long to get out.
I allocate approximately 20% of my portfolio to this strategy.
INTCfan |
