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Strategies & Market Trends : Your Worst Trading Enemy.. You -- Ignore unavailable to you. Want to Upgrade?

To: Fun-da-Mental#1 who wrote (58)	1/17/2001 1:27:33 PM
From: shawnwolff	Respond to of 223

Re: My take on 3-5 dollar stocks You may be right Fun-da-Mental#1. I have very little experience "investing" in small stocks. The reason I avoid them as investments is that I see them moving much more erratically. They tend to be prey for daytraders, who have generally short attention spans. So I find it harder to find stable, consistent, slow climbs in them. I do know someone who does invest in them, with no stops. He accumulates all these small stocks, reasoning that they can't go to 0, so downside is very limited. He reasons that there can only be one direction to go - up. What he is finding though is that there is another direction, and that is side-ways. So he has all his money tied up in all these little dogs that are going no-where. And for every one that is lucky enough to spike as the daytraders find it, there are ten more still drifting aimlessly. - Shawn

To: Fun-da-Mental#1 who wrote (58)	1/17/2001 2:16:17 PM
From: shawnwolff	Read Replies (1) \| Respond to of 223

Re: Low Volume Along those same lines... another reason I personally don't invest in small stocks (although I admire traders who successfully do), and why I find that many move erratically, is that many of them tend to have lower average daily volume. People, I think, often get so wrapped up in "how" stocks tend to move (charts, moving averages, etc)that they neglect to think about "why" stocks move. Stocks move because people move them. It takes interest in a stock to make it move. It takes consistent interest to make a stock move consistently. Lack of interest(low volume)can result in sudden movements as interest comes and goes more erratically, resulting in spikes and quick falls. I find that it becomes very difficult to predict behaviors of stocks with inconsistent volume. Longer term trends depend on consistency. If a stock gets news, or any other reason for sudden interest, it attracts players that ordinarily have no interest in that stock. That tosses any long term trend out the window. And small stocks are again, daytrader prey. Unless they have consistent volume, I tend to stick with short-term trades on small stocks with increased volume and fresh momentum. In those cases I keep very tight stops. - Shawn

To: Fun-da-Mental#1 who wrote (58)	1/25/2001 9:17:47 PM
From: Ally	Read Replies (3) \| Respond to of 223

>In these cases it may be better to set a limit order rather than a stop, and wait for it to be taken out. Or you could set a stop and a limit, but then it's pretty random which gets taken out first.< Good point! Limit order rather than a stop is more appropriaate in certain cases such as an illiquid stock, or a stock that is played by specialist (market maker). Also, stops will be easy lunch for small brokerage firms who trade on their accounts. Take for instance what I've experienced recently. I shorted DSG (on TSE) believing that the stock has had a run up, and is due for retracement. I notice one small brokerage firm quite frequently crossing either 10,000 or 100,000 shares when the stock is on uptick. The firm is also active as both buyer and seller. From the stock action, it seems to me that: 1) It buys up all the low bids from individuals. 2) Crosses large volumes on a white 5 minute candlestick. This creates a illusion of daily liquidity on the stock. Also, would attract individuals to jump in and chase the stock. 3) Then, it feeds the individuals the stock bought at the low bids. Anyone else observed the above situation before? Is it legal for a firm to cross large trade internally and give appearance of large volume? I covered my short today.. but not by placing a stop. I watched the 5 minute chart and bid/ask closely. If I had used a stop, the firm would have had me for lunch. At times, the spread was as much as a buck !! Canucks here... check it out... Descartes Systems DSG/TSE