25 TIPS:
From: Home on the range where the buffalo roam
To: Gregory Mullineaux who wrote (7610)
From: mishedlo Saturday, Dec 16, 2000 3:20 PM ET
Reply # of 7619
25 Tips I put together.
Now, If only I can practice these to perfection. LOL
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Tip #1
Watch the Tick Count.
The tick count is a measure of stocks sold on an uptick as opposed to a downtick.
-1000 is very bearish (fear)
-1200 is borderline panic
-1400 is definite panic
+1000 is panic buying
The short term trend (STTI for the NAZ, SHRT TRM TRD NDX for the Dow) is a ratio of declining vs. advancing issues and their associated volumes. At any rate when the Tick is very bearish, and money starts pouring in (the STTI is under 1) that is usually a reliable buy signal. Keep buying or trading long, as long as the STTI is under 1, the lower the better.
This is all relative, The higher the (negative) tick count and lower the STTI, the more reliable the signal.
If you see something like -1000 and a STTI of .5, you have near panic buying and a reversal in place.
A number like -1400 is something found at market bottoms. Note that it can take more than one day of these. Watch the STTI for confirmation.
When the market is sinking rapidly and you are looking to buy short term, this may help you find the day's bottom. If the SSTI is not below 1, or at least has not fallen from a high number to just about 1, then just stay the hell out of it.
Here is the link again.
quote.yahoo.com^vix+%5Etic.n+%5Esti.n+%...
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Tip # 2
Watch the put/call ratio.
The higher this indicator rises above 1, the more bearish people are. When amateurs are starting to buy PUTs the bottom (or temporary bottom) may be in as the masses are wrong at the tops and bottoms. If it rises far above 1, a reversal (even if only a short term one) could be near.
Options etc and put call ratios are found on www.cboe.com
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Tip #3
Patience Patience Patience.
I imagine everyone has noticed but we are in a bear market. The trend is your friend. There are at least 3 down days for every up day. If you really want to add to positions, buy on the third down day in a row. Sell the rally.
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Tip #4
Lighten up on the number of stocks you have.
Get to know them very well. Know the support and resistance levels like the back of your hand. The best charts are in your head. I do not have to consult RMBS charts to know where support and resistance points are. One can make a killing just trading a few stocks. Buying RMBS at 40 and selling at 60 a few times can do wonders for your portfolio. Same thing with any stock
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Tip #5
Learn to sell.
You hate to sell that winner cause you think it will go to the moon. You hate to sell that loser cause it might come back. This is a bear market. Nothing goes to the moon and stays there. Sell the rallies and buy the dips.
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Tip#6
Think about shorting.
This volatile market is not the place to practice with stocks like CIEN and JNPR that can swing 30 points easy in a day. If you are not comfortable with shorting, buy want to get comfortable with it, then practice on something that does not move much. Short 100 shares of AMZN. Hold it overnight if you want. Nothing very bad is likely to happen.
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Tip #7
Use stop losses on your trades.
Do not let a 2 point loss turn into a 12 point loss. If the market goes against you consistently, you are doing something quite wrong. Figure out what it is before hopping back in. Try not to be a bear on a bull reversal, try not to be a bull after a 2 day run up.
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Tip #8
Trade only in the direction of the day, unless you are watching the tick count and have spotted a reversal (or are positioning yourself near the close on the third down day). If the market is down, look to trade short. Find something is not down and watch it for a likely shorting opportunity. If a stock has fallen to support wait for it to recover a bit and short at resistance or when it stalls.
If the market is up (not many of these), look for stocks bouncing off support and buy those. If you already bought a stock and sold at resistance for a nice profit, look to buy that same stock back a few points lower for another run.
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Tip #9
Trade only a few stocks at a time. Even one at a time is fine. If you are not used to watching a lot of stocks, start with one, and watch it like a hawk.
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Tip #10
Never let a profit turn into a loss.
You can never go broke if you take profits constantly and do not let your losses get away from you.
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Tip #11
Sell the opening gap if it is large.
Up gaps will fill, usually the same day
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Tip #12
Try not to buy stocks in the first hour of trading, especially on a day with an opening gap up.
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Tip #13
Get some decent trading tools and learn to use them.
Nas Level II is a must. Watch the volumes, watch support and resistance points.
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Tip #14
Beware of "bargains" and falling knives.
Stocks in the gutter and/or those that are seriously in free fall are falling or have fallen for a reason. Just because something has fallen 50 points does not make it a bargain.
JNPR was no bargain when it fell from 230 to 180.
If fell another 80 points from there and only got back to 164. It is now 130. 200 may never be seen again IMHO.
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Tip #15
Control your emotions.
I struggle with this all the time. Greed and fear are both killers. Both have hurt my portfolio big time. Do not panic buy to get in on the "next big thing". Do not panic sell at the bottom. I plead guilty to both of these sins this year.
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Tip #16
Average in average out when short term trading.
This would have done well with QCOM for example.
After it stalled at 100, perhaps you thought it would hit 120, but if you were buying from say 50-80, then perhaps it is time to lock in a profit on the shares purchased at 80. When it fell to 90, perhaps sell another third or quarter. Perhaps, in this market just sell the rest of it.
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Tip #17
Stocks are only worth what the market is offering.
You may do a discount cash flow analysis that "proves" RMBS is worth $200 or whatever, or SSTI is worth $35. If the market doesn't believe it then why should you?
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Tip #18
Save some cash for the bottoms and BIG dips.
100% investment might make some sense in a bull market, but has little place in a bear market IMHO. Raise some cash. Sell the rallies. Repeat after me “Buy the BIG dips, sell the rallies, buy the BIG dips, sell the rallies, buy the BIG dips, sell the rallies”. Even if the LBTH portion of your port is getting killed, the trading portion should help keep your sanity.
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Tip #19
Beware of margin.
Unless you are a professional in full control of your emotions, stay away from it.
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Tip #20
Wait for stocks that have fallen and based for a while. In this market they are few and far between but worth watching for.
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Tip #21
Wait in the deepest gaps.
This last rise from 2500 to over 3000 left many gaps on the charts. Wait to buy stocks you like in the bottom gaps.
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Tip #22
Do not hold stocks right before earnings.
This market is hammering almost everything, on good bad or indifferent earnings.
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Tip #23
Read Read Read
Buy books on TA, trading, options, market psychology, etc, etc, etc.
Study them.
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Tip #24
Keep an open mind at all times.
If you are a bull, go the bear threads and listen to what they have to say. Maybe they will change your mind. If you are a bear do the same thing. If your stock is acting funny or going down when you think it should be going up, then something is wrong. Look at the short interest. Huge short interest in SSTI (A stock I love with big earnings). Something is wrong with this picture. Are the bears wrong, or is a huge, huge inventory is building up?
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Tip #25
Beware of bad tips. LOL.
They can kill you.
I lost money on almost every stock tip given to me this year. Do your own homework. Do not blame others for your trades.
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