I don't belive in stops. When the reason for the trade disappears, so will my position.....
Bvsn trade rationalle.....
- Thread starter praetorian2
- Start date
Hi.
Praetorian, your reply begs the question.....
What in particular would call for the dissolution of the trade? Can you be more specific? Why are you in the trade at this time, and what might get you out?
Praetorian, your reply begs the question.....
What in particular would call for the dissolution of the trade? Can you be more specific? Why are you in the trade at this time, and what might get you out?
In all honestly I can't give a specific example of what would make me fold my position. Say yesterday's low was taken out, I'd probably tripple my position as that's too obvious of a stop blower (I very highly doubt that happens except premarket). If it starts to go up fast, that's the only thing that will make me exit, or a large gap up over the .5 level. If after a half day of trading, it isn't green on the day, I'd probably ditch half my position, and if by close it's red, then that would destroy my "bottom" hypothesis. Basically, we both know it's going to zero by xmass. What I'm hoping is that a short who's just made 30 pts in it won't tie up that much capital to make the last point, but would rather cover now than risk the stock being "saved" or aquired at a premium. Ask yourself this..... If you got short last year, and have a monster profit in the position, would you cover at least some now at such a large blowoff bottom position.....? I know I would, and that's what I'm hoping to see.... I don't know how much more specific I can make this. All my trading is instinct related.... However, I NEVER risk this much of my capital or take on this large of a position, unless I am VERY VERY VERY confident. And I feel that I am. Risk reward is maybe 15c:45c or 1:3, which is a very nice outlook, especially when I'm 99% confident. Good luck, and dont chase.....
Hey Pre
Not sure I follow your rationale about short covering. Why wouldn't that hypothetical short have bought to cover at 5? at 3? or at 2? From the chart it doesn't look like anyone has stepped up to cover at any of these price levels. If I were short a lot at, say, 30, I'd be covering a little bit all the way down, even if I were pretty sure the stock was worthless.
I'm just wondering if this is one of those trades that is more instinctual...where you see a pattern you've seen hundreds of times, but it's something you can't easily define to someone else.
Not sure I follow your rationale about short covering. Why wouldn't that hypothetical short have bought to cover at 5? at 3? or at 2? From the chart it doesn't look like anyone has stepped up to cover at any of these price levels. If I were short a lot at, say, 30, I'd be covering a little bit all the way down, even if I were pretty sure the stock was worthless.
I'm just wondering if this is one of those trades that is more instinctual...where you see a pattern you've seen hundreds of times, but it's something you can't easily define to someone else.
A good rationale for the trade is that the selling pressure on Friday was exacerbated by all the S&P index funds that had to be out of the stock by the end of the day. All that selling pressure is gone now making a technical reaction to the upside very likely over the next few days.
Index funds are not price sensitive in any way other than to make sure they do no worse than the closing price. For the executing brokers this provides an incentive to try to close the stock on or near its lows. Since index funds are usually guaranteed an execution at the closing price (often in conjunction with a profit sharing arrangement on the transaction) executing brokers are very interested in a close below their average selling price or they will have to eat a loss.
BTW, BVSN is pretty actively traded in Germany and will be trading there on Monday and Tuesday before US markets reopen. Yahoo has intraday quote information (http://de.finance.yahoo.com/q?s=901599.DE for XETRA and http://de.finance.yahoo.com/q?s=901599.F for Frankfurt floor trading). You have to take into account that trading over there closes at 2 pm EST when interpreting Friday's closing price.
Dave
Index funds are not price sensitive in any way other than to make sure they do no worse than the closing price. For the executing brokers this provides an incentive to try to close the stock on or near its lows. Since index funds are usually guaranteed an execution at the closing price (often in conjunction with a profit sharing arrangement on the transaction) executing brokers are very interested in a close below their average selling price or they will have to eat a loss.
BTW, BVSN is pretty actively traded in Germany and will be trading there on Monday and Tuesday before US markets reopen. Yahoo has intraday quote information (http://de.finance.yahoo.com/q?s=901599.DE for XETRA and http://de.finance.yahoo.com/q?s=901599.F for Frankfurt floor trading). You have to take into account that trading over there closes at 2 pm EST when interpreting Friday's closing price.
Dave
dlincke... Very interesting about the overseas trading, I have never paid much attention to it, but I assume that it will already have gaped up some on tues if it does trade overseas monday. You are both right. It's a pattern I've seen a milliion times, and that's why I'm so confident. I'm counting on the sp pressure. Dont' forget these guys who bought all this crap stock from the sp are gonna want to bank on it. Since only like 15 mil traded in the 2 days before the announcement before the sp blocks, I assume that someone is long about 15 mil of it. They're gonna want a profit. It's going higher.
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BTW, I looked at the yahoo, don't speak much german though.... I'd like to add that I'm not saying that it WILL go up. Just that I think it's a very high odds play. PLEASE do your OWN dd.
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BTW, I looked at the yahoo, don't speak much german though.... I'd like to add that I'm not saying that it WILL go up. Just that I think it's a very high odds play. PLEASE do your OWN dd.
Magna
Administrator
praetorian,
Thanks for doing your best to try and explain your rationale behind the bvsn trade you're in. I know it's extremely difficult to attempt to spell out something that is so instinctual to you, but it sure helps alot of us to get a glimpse as to what you're thinking and why you're thinking that way. Appreciate it.
Thanks for doing your best to try and explain your rationale behind the bvsn trade you're in. I know it's extremely difficult to attempt to spell out something that is so instinctual to you, but it sure helps alot of us to get a glimpse as to what you're thinking and why you're thinking that way. Appreciate it.
P2,
This might be off topic. Are you still using CyberX or CyberTrader as you trading platform or trading using EchoTrade.
This might be off topic. Are you still using CyberX or CyberTrader as you trading platform or trading using EchoTrade.
I'm still at cybertrader, I'm gonna give echo a try in the near future, I'm now "studying" for my s7.
Praetorian2: âI don't belive in stops. When the reason for the trade disappears, so will my position. I can't give a specific example of what would make me fold my position.â
Before I comment I want to be absolutely clear on something. Iâm not here to contest the profitability of praetorian2âs methodology, nor am I condemning him for his statement. The fact that he is undoubtedly looked up to as an authority gives great weight to his remarks and influence over some traderâs actions. Based on this I wish to address new traders only.
IMHO, not believing in the use of stops is suicide for new traders. If, over time, a trader develops a method that is effective, based on the observation that static stops are a hindrance to profitability, then by all means implement this strategy. But until newer traders have the experience to make these type of judgments do not trade this way. Give yourself time to develop such a âfeelâ.
The inability to be specific about what would force one to fold a position and declare the reason for the trade invalid is dangerous for a new trader. New traders that practice this type of trade management often fall under the spell of rationalizing the viability of a trade in which parameters are not specifically spelled out. I have had experiences with new traders who have done just this and taken very large losses because they continued to grasp at any indication that supported their original decision.
Believe me, many traders do not think straight in the midst of a losing trade. I cannot tell you the number of times I have heard a trader step out of a loser and say: âWhat the fuck was I thinking?â Inevitably, they realize that they were looking for anything to avoid the pain of taking the loss. This happened because they did not have concrete exit conditions or failed to abide by them.
That said I personally practice a similar approach in that I determine reason(s) for a trade and do not necessarily use a concrete stop. I am, though, absolutely aware of the objective criteria that support the trade and know when these are violated. I also have a disaster stop that will pull me out of the market no matter what occurs.
I also appreciate that you took the time to explain your thought process, praetorian2. Thank you.
Before I comment I want to be absolutely clear on something. Iâm not here to contest the profitability of praetorian2âs methodology, nor am I condemning him for his statement. The fact that he is undoubtedly looked up to as an authority gives great weight to his remarks and influence over some traderâs actions. Based on this I wish to address new traders only.
IMHO, not believing in the use of stops is suicide for new traders. If, over time, a trader develops a method that is effective, based on the observation that static stops are a hindrance to profitability, then by all means implement this strategy. But until newer traders have the experience to make these type of judgments do not trade this way. Give yourself time to develop such a âfeelâ.
The inability to be specific about what would force one to fold a position and declare the reason for the trade invalid is dangerous for a new trader. New traders that practice this type of trade management often fall under the spell of rationalizing the viability of a trade in which parameters are not specifically spelled out. I have had experiences with new traders who have done just this and taken very large losses because they continued to grasp at any indication that supported their original decision.
Believe me, many traders do not think straight in the midst of a losing trade. I cannot tell you the number of times I have heard a trader step out of a loser and say: âWhat the fuck was I thinking?â Inevitably, they realize that they were looking for anything to avoid the pain of taking the loss. This happened because they did not have concrete exit conditions or failed to abide by them.
That said I personally practice a similar approach in that I determine reason(s) for a trade and do not necessarily use a concrete stop. I am, though, absolutely aware of the objective criteria that support the trade and know when these are violated. I also have a disaster stop that will pull me out of the market no matter what occurs.
I also appreciate that you took the time to explain your thought process, praetorian2. Thank you.