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Strategies & Market Trends : Trading For A Living -- Ignore unavailable to you. Want to Upgrade?

To: Char who wrote (860)	7/11/1998 1:59:00 PM
From: Rick Slemmer	Read Replies (2) \| Respond to of 1729

David: Welcome to the world of daytrading! It was about 200 when I put in the order and it fell so fast that I got executed at 198 15/16. So much for limiting losses at ¬ point. That is the problem with the advice from traders who tell you to cut your losses. When the stock moves against you sharply, you head for the exits. Unfortunately, everyone else has the same idea and you end up selling/covering when the stampede finally stalls or reverses. I lost more money following the "cut your losses and let your winners run" advice than by any other method. I've since recouped those losses using modified position trading on stocks that show definite trends. Sometimes I hold a stock for a few hours; sometimes a few days, and occasionally a week or two. But unless you can get on the AMZN/YHOO/EGGS crest of the wave, daytrading is stressful and not at all easy to master. It's simply too easy to be shaken out of a good position when your tolerance for a loss is an eighth or a quarter. I follow some very simple rules: Find patterns in the stock that indicate the next immediate short-term move; Eliminate those stocks with spreads over half a point; Buy or short 5,000 to 10,000 shares during market hours based on the intraday activity (always use limit orders); Set a reasonable stop on the downside; Cash out when your profit makes the exercise worthwhile. Only you know when that is. Sure, I've left a lot of money on the table; PIXR springs to mind; I bought in at 46 and sold at 48.75, only to watch it go to 65 a few days later. But I was happy with the gain so I cashed out. Onward to another opportunity. Good luck! RS

To: Char who wrote (860)	7/11/1998 3:23:00 PM
From: Jim S	Read Replies (2) \| Respond to of 1729

David: Ah, yes, the School of Hard Knocks (HKU, my alma mater). There are many on this thread much more experienced and wise than I, but I can't help tendering a comment: "Don't use market orders on Nasdaq!" Watch the tape (like on quote.com). There will be a normal 1/8 to 1/4 point trading range on a Nastydak stock for a while, and then, all of a sudden, there will be one trade that spikes up or down. When I see that, I know some MM just grabbed up a market buy or sell put in by some poor slob who thought he was going to get the quoted price. The NY and American exchanges are auction priced, so this dosen't happen there. The Nasdaq, though, is run by MMs who have no aversion to taking your money. If you are LII trading, and can specify the routing of your order, I guess this wouldn't apply. But, if your broker routes your order, DON'T USE MARKET ORDERS on the Nasdaq! OK, all. Correct me if I'm wrong. good trading, jim

To: Char who wrote (860)	7/11/1998 6:48:00 PM
From: jawd	Read Replies (1) \| Respond to of 1729

At least you came out even. The "cut your losses" idea needs to be taken in context. For instance, my last big loss was with EGGS. I bought a ton at around 18 1/4. It slowly went down to 15!!! Yes I was doing all the wrong things like doubling up and so on. But nothing was working. I then feared it would go all the way back down to maybe 10. So I took the loss. A week later its at 21. Could've made mucho if I waited. So why did I take the loss? Because I wasn't confident in the stock. I really didn't know the whole story behind it. I was in no mans land. Recently, I decided that the day trading was wearing thin on me. I have a life. I could be reading, or learning something interesting on my computer (like Visual Basic which interests me). And I have no real financial needs. So, I'm taking a breather while holding a long position in Yahoo. It might take a few weeks, it might take many months. But I have confidence in Yahoo and I needed a break from day trading. When I come back I'll have a good bit more experience than when I started in April. In the meantime, I've still got the "rules" which I pinned up in front of me and every day I'll be trying to let them sink in. As regards market orders, I find that on a fast moving stock its virtually the only way to get in. You simply can't set the limit price and get in before it moves again. So, if I see a stock shooting the only way is to shoot off a market order. For this I generally use ARCA. Also, bear in mind on ARCA you are limited to 1000 shares. So if you want 2000 or 3000 you just shoot off two or three market orders at 1000 each. It took me a couple of months to work that out - don't know why. Inexperience can lose you a fortune on a stock like YHOO with its current 20 point intraday spread between high and low. It moves 5 points in 5 minutes. Not good for learners. All the best