Don's Opening's Journal....
- Thread starter Don Bright
- Start date
Had to ride a while with FRE, glad AOL had the word out before the opening. 3 for 4 $620.
I'll be back in...and I just bought some at $23.....real time....let's see what happens!!
Today was pretty good, 4 out of 5 winners (lost a bit in VIA.B)....+800, out by 9:40 ET.
It's time to add something to this thread about exit strategies and intra day volatility. First off, be sure you have adjusted your group of stocks individually for their beta, keeping in mind that you will make the most from the ones that are more risky (your basic "risk reward ratio").
If we have an extreme opening, either side (up or down), then you want to look for the additional "shake out"....and by this I mean the continued move in the opening direction. For example, if GE opens up .75 and you have just shorted it, you will likely see a short "shake out" period where there is a slight continued move to the upside. By trading the same stocks every day, you will learn to expect this type of thing in certain issues, and plan for it.
The other extreme is the stock that opens up .75, and immediately sells off by .20-.30 or so before running back through the opening price. I call this the "slingshot" move.
These two examples can be handled quite easily...with some basic forethought. This may "fly in the face" of what so many preach, so much so that I want you to analyze what I say before making an evaluation. Most people use "stops" or "trailing stops" as a protection against losses. I am suggesting that you do just the opposite: Place a "profit protector" bid or offer in just after receiving your fill, at a price around .20-.30 away from your entry point. DO NOT place a stop loss in the other direction. Try this strategy on your group of stocks and you will see that you can monitor your risk on the "shake out" stock, and that you can capture your profit on the immediate slingshot move.
There is so much more to this simple strategy, that I am starting to think that it is not as simple as I once thought....but then, what is when it comes to making money??
Good Luck!!
It's time to add something to this thread about exit strategies and intra day volatility. First off, be sure you have adjusted your group of stocks individually for their beta, keeping in mind that you will make the most from the ones that are more risky (your basic "risk reward ratio").
If we have an extreme opening, either side (up or down), then you want to look for the additional "shake out"....and by this I mean the continued move in the opening direction. For example, if GE opens up .75 and you have just shorted it, you will likely see a short "shake out" period where there is a slight continued move to the upside. By trading the same stocks every day, you will learn to expect this type of thing in certain issues, and plan for it.
The other extreme is the stock that opens up .75, and immediately sells off by .20-.30 or so before running back through the opening price. I call this the "slingshot" move.
These two examples can be handled quite easily...with some basic forethought. This may "fly in the face" of what so many preach, so much so that I want you to analyze what I say before making an evaluation. Most people use "stops" or "trailing stops" as a protection against losses. I am suggesting that you do just the opposite: Place a "profit protector" bid or offer in just after receiving your fill, at a price around .20-.30 away from your entry point. DO NOT place a stop loss in the other direction. Try this strategy on your group of stocks and you will see that you can monitor your risk on the "shake out" stock, and that you can capture your profit on the immediate slingshot move.
There is so much more to this simple strategy, that I am starting to think that it is not as simple as I once thought....but then, what is when it comes to making money??
Good Luck!!
Don,
excellent laid out! So many times we see these shake outs, but in terms of a mental stop loss what do you think is appropriate under those circumstances? BTW, had 2 long winners and one short loss today. The latter one was CAM which in retrospect I should have avoided since the oil price rose overnight.
excellent laid out! So many times we see these shake outs, but in terms of a mental stop loss what do you think is appropriate under those circumstances? BTW, had 2 long winners and one short loss today. The latter one was CAM which in retrospect I should have avoided since the oil price rose overnight.
Don how long have you been trading. The reason why I ask is that I believe you have been trading for quite a while and I am a bit surprise that your entries are at low share volumes. I would expect that a person at your experience level would be entering positions of minimum of 10,000 plus per trade.
Rather than trying to hold through shakeouts or take profits before a slingshot move, if you can spot these moves in advance then would it not make more sense to wait for the shakeout and then enter; or wait for the slingshot move and then ride the slingshot rather than settle for small profit target?
In both cases the risk/reward ratio is much better to wait for the false move and then enter, that is assuming a trader can indeed identify a false move in the making.
In both cases the risk/reward ratio is much better to wait for the false move and then enter, that is assuming a trader can indeed identify a false move in the making.
I don't think you can predict false moves. well otherwise they would not be that fake. maybe yes anyway..
I am not smart enough. so I pyramid in. Throw some shares in, see how they are absorbed, and what comes next. It is funny how you see things differently when you have money in a stocks.
if there is a shake out, I stay in and average the position. That beats going in all at once imho.
if there is no false move, I am already in. that also beats not being in (when you would wait for the shakeout) and just see the trade run away (and higher !). pyramids ! pyramids I tell you!
tntneo
I am not smart enough. so I pyramid in. Throw some shares in, see how they are absorbed, and what comes next. It is funny how you see things differently when you have money in a stocks.
if there is a shake out, I stay in and average the position. That beats going in all at once imho.
if there is no false move, I am already in. that also beats not being in (when you would wait for the shakeout) and just see the trade run away (and higher !). pyramids ! pyramids I tell you!
tntneo