Sorry I could not respond earlier, I had to leave in a rush as I finished the edit of my last post. Before I left, I did not like the fact that the 3450 acted as more of a barrier than I expected (I expected one or two bounces and then a breakout by 3:00 PM, it did not happen) and since I am out tomorrow morning, I felt I did not want the heavy exposure and decided to increase cash for a short time to the 35% to 40%. So by the time I posted my last post, I also put sell orders on a number of stocks just above the price there. I got out of RDRT at $8-3/16 ($1.125 to the good), $22-7/8 on SSTI ($3 to the good), $70-3/4 on CMRC (a good one, $12 to the good, but the last trip was $14) and SCMR at $70 ($7 to the good). That got me to about 37% cash (other GTC simply did not hit...).
As for your question, I really do not know the answer. My experience is that I make 80% of my profits on 20% of my trades. The other 80% include the losses and more minor profits. It depends a lot on the market you are in.
Before I decide on a "trading stance" I consult the turnips as to the general market health and cycle. I use the road map they lay out for me to design the strategy.
Early in the year, the turnips were correctly bullish until March and I was fortunate to be in the like of JNPR, BRCM and BRCD for doubles on each, and I did not trade then for the full three first months, I posted these early on the thread and then let them run. Similar good move in VECO and CYMI early in the year (prior to the March massacre), and fantastic runs in HAUP, CDTS and SCON (all documented here) helped as well. Then we got the March decline, but I did not overstay my welcome. I took advantage of the first bottom for the April Rally, but in April warned every one of another decline coming in in May. My turnip misled me there and I started deployment around the 18th (they had the 20th as the bottom, and I try and get into few positions before the bottom, since those have a habit of turning first). Well, that cost me a little bundle, since the market did not bottom until the 28th, nevertheless, I was fully loaded for the "stealth rally" that got us eventually to 4350. When you go from 3050 to 4350, you got to have few great winners, and I did.
Right now, the turnips are still showing a rally to 3650 by late November a decline to the 3100/3200 into early December (could it be right here? na) and then a year end rally. By the middle of January will be watching for signs that the market is dying.
Another tactic is "fast trading" in just four, five stocks (like right now, I am concentrating on RMBS, VECO, RDRT, SCMR and CREE) that are highly volatile. That is tricky (and two of them, SCMR and VECO left me in the lurch with big losses in the last few weeks, forcing me to work hard to recover those losses, RDRT pulled such a trick on me as well, but last Monday, sensing a debacle coming, I got out of the bu$$ just before it gapped down on Tuesday). If you follow few stocks closely, you should develop a sense from their trading behavior as to when a directional change is to occur. Often, I get it wrong (my recent entries into HAUP and CCRD are such cases).
Finally, I do not let any position get above 10% of the folio. Typically I start with 2% to 3%, on rare occasions, when the turnips miss a turning point I would double down when it goes against me (that is not a good philosophy by the way, and I am ready to throw the towel before the end of the year on HAUP, that approach has a tendency of concentrating your assets into "loosing situations"). CCRD seems to be healing, and I might be lucky and actually make money on it (I bought at $9-3/4 for a dcb that never came than doubled up at $7-7/16, big mistake, but I might be all right on this one still).
I do not use just a single tactic either, in some cases, I try to let the profit runs (like CREE, CMRC, recently, QLTI and the holy one earlier in the year and of course, the trio JNPR, BRCD and BRCM and the bu$$ very early in the year). Other time I simply "play the channel" and get caught in an updraft like the bu$$ (or downdraft) from time to time. The thing I rarely do is hoping that a stock will come back to my buying point. I would rather sell at a loss and try and get back in even lower if I still like the company (it often works, I did that a lot with SCMR in the last four weeks).
Finally, many stock I do trade, i will give a short rationale here on the thread as to why I think that trade might be a good one, or when I leave a stock, like the holy one, why I think it is dying a slow death (like HAUP). Remember, you cannot win them all (I surely cannot), so don't let your losers drag your folio down the drain, recognize your error as fast as possible and get to the next game in town.
Good luck, I hope this help, but i don't think that I am going to write a book about this. Too many patents to write (VBG).
By the way, it is rare that I make 100% on the total folio per year, somehow I always get caught with an SPCT or PROG that comes back and bite me hard.
Zeev |
