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Strategies & Market Trends : Momentum Daytrading - Tricks of the Trade -- Ignore unavailable to you. Want to Upgrade?

To: Sir Francis Drake who wrote (1925)	4/17/1999 1:02:00 PM
From: Tai Jin	Respond to of 2120

What I have found is that you cannot lose sight of the objective or you will be taking losses for no good reason. What I mean is that if you trade with the trend then don't let small pullbacks shake you out (as long as the pullback does not break the trend). The trend has to be determined by studying the chart and trading action. Prices can and do wiggle by 1 pt or more (especially the more volatile issues) during a trend, so more likely than not you won't enter the trade at the exact local minimum price. If the stock drops it only means that I entered a bit early and assuming that the prevailing trend is still up then I should average down. I find that in a situation like this if I take the immediate loss I will only be throwing money away. Whereas if I only hold for a little longer (and perhaps averaged down) that I would have a winning trade. So what I'm saying is that it is important to enter a trade with the correct assumptions based on TA and watching the trend. If you enter a trade with the wrong assumptions then you must get out immediately with a small loss or take a much bigger loss later (I've learned this many times). On the other hand, it's just as important not to be shaken out of a good position if the trend is still with you. It's as simple as that, but I find that it's easily forgotten when you are sweating every down tick and forget that the longer trend is still with you. ...tai

To: Sir Francis Drake who wrote (1925)	4/18/1999 2:16:00 AM
From: Crispin	Read Replies (2) \| Respond to of 2120

Sir Francis.. If you are absolutely sure that microsoft is always going to go up then wouldn't you just gear/leverage/margin /option/etc to the level of return you want (while taking into account the downdrafts you have mentioned) I personally wouldn't do this because I believe you can't be that sure, but you follow the company so closely that you seem confident that it can't happen without you knowing about it. Crispin

To: Sir Francis Drake who wrote (1925)	4/20/1999 5:33:00 PM
From: Ken Wolff	Read Replies (1) \| Respond to of 2120

Hi Morgan, Your ideas are well thought out and I have no problem with them. You have adapted a technique for trading one stock that makes sense to me. Over the years I have seen many stocks behave as you describe MSFT. Normally the percentages you earn while being consistent are not nearly the potential we enjoy with stocks that swing 20 to 50% in one day in value. But each trader must decide how much money they need in light of their portfolio value. When I began, I developed my techniques to continually extract the most out of the market based on a portfolio only worth $6K. So I found techniques that met my particular needs and goals. If you have $500K your percentages can be less and you can trade MSFT or other stocks relatively easily and do well. I like your ideas and agree with them. When daytrading volatile stocks that swing 50%, value is not really an issue because it is worth what traders "feel" it is worth and so the value is perceived. Stocks that basically have a low beta and make smaller moves will trade based on "real" value and lets hope to god they don't miss earnings much. The street hates surprises. Good luck Ken www.mtrader.com