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Strategies & Market Trends : The Final Frontier - Online Remote Trading -- Ignore unavailable to you. Want to Upgrade?

To: dunlurkin who wrote (2380)	1/13/1998 1:12:00 PM
From: Robert Graham	Respond to of 12617

I have a rather outrageous suggestion to make here. But this should not be anything new from me by those here who have followed my previous posts. I suggest that the only prudent way to trade and make profits on a one or two point move is through day trading where you do not hold a position overnight. You may end up obtaining more than that one or two points, but the goal here is to pick up on comparatively small changes in the price of a stock. IMO this would include trading on those intraday market swings that we see demonstrated by the DJIA. The market as measured by the DJIA has been much more volitile than usual, so this type of trader has possibly been making much more money than they usually do. Now, if you trade for lets say that 3 or 4 or more point gain, that is if this is your goal, than you can do this successfully in other timeframes like that over a couple days. Stock trend and momentum would make this feasible. This can include trading on strong breakouts. So in this type of trading, the price is providing the leadership as to when to enter and exit the trade and not the duration of the trade itself. This approach is different than the more "scalping" type of approach mentioned in the above paragraph. My suggestion is that this second method of trading is not really day trading. The choice of closing the trade at the end of the day is more indescriminant than that of the scalping approach to trading which necessitates day trades. So even though this type of trader still chooses to close out at the end of the day, this decision is not as an essential part of the success formula as it is with trading on very small intraday price fluctuations. So I would not call this day trading, or at least lets distinguish this from the type of trading that necessitates closing positions at the end of the day. This is like me holding an option in some cases less than one week, and in other cases a couple weeks or more. My preference is to hold the option for the shortest possible time, preferrable just a few days, in order to obtain the desired profit. However, I may hold on to the option more that one week as long as its price is remaining firm and there is continuing evidence that it will move up. I may hold onto the option longer than two weeks if the momentum of the stock is strong. Do I call myself a "week" trader since this most of my option trades meet my preference for holding no longer than one week? I just look at myself as an option trader that trades on momentum for that two or more point move in the option. If this comes within one week, which it will if I made a good selection, then I will take my profits. However, I may hold onto the option longer depending on the situation. Still, I can always choose to exit all my trades in the same week using my same approach to trading options. Will this help me manage the risk? Perhaps. But I would consider this not an essential part of my success. For that matter, this rule may get in the way of my profits, and therefore alter the profit to risk picture of my trades. Just some thoughts. Any comments? Bob Graham