If it doesnt gap up.. it will have an inside day and stop you out at a loss... I dont like that setup.. risk to reward isnt justifiable in my opinion...
--MIKE
DT1 Swing Trading Journal
- Thread starter DT1
- Start date
If it doesnt gap up.. it will have an inside day and stop you out at a loss... I dont like that setup.. risk to reward isnt justifiable in my opinion...
--MIKE
Quote from iceman1:
I don't agree with a plan to "not short sell stocks when OVERALL market moves up". That is too broad a generalization to make for a valid trading rule. IMHO.
>>> You are right. But the exact rule would be "not to short sell stocks moving up while the overall market moves up". Generally weak stocks do not move up even if the market is moving up. Don't you agree on that?
If you --were-- short ACS... consider looking at the sector itself first... and it's relative strength to the broader markets. Then IF the chart yells short.. and the intra-day is diverging from the broad markets... or underperforming... you gotta re-think holding the position.
>>> At the moment I do not follow sectors... but I should. I will have a look on this... once I finfd out how to set it up in Qcharts
Also what about key S/R areas. IF it has not breahched said levels then it should be held regardless of what the broad market is doing. A rising tide lifts all boats, even the (shorts) dogs sometimes.
>>> I chose to use tight stops. I think Trend_Fader will agree on that. I now put my stops close to the first S/R level. This is why I was stoped out. What do you do when a stock is getting close to your stop but you still think you are right? Do you move your stop to the next S/R level?
DT1... here is the thing about tight stops...
If you are a professional trader.. you might be using a %1 position size risk model.. Which means you are risking %1 of your account per a trade... Personally I risk under %0.33 of my account per a trade...
THis means if you have $10,000 in your account you are only willing to lose $100.. which in turn is %1... So if you buy a stock at 100 and put a stop loss at 90 .. you have a %10 stop loss.. so you buy 10 shares... because if you get stopped out you only lose %1 of your total account...
No here is the problem.. with such a position sizing strategy w/ tight stops... if you bought a stock at 100 and have a stop at 99.. this position sizing model would force you to allocate your entire portfolio to that position.. which is suicide for overnight risk....
So... if you are a swing trader... too tight is not really so good.. because it would force you to allocate too many resources into one trade... The great benefit for tight stops is.. that if you are right and have a huge winner you will have a big gain as a multiple of your initial risk ...
If you are a professional trader.. you might be using a %1 position size risk model.. Which means you are risking %1 of your account per a trade... Personally I risk under %0.33 of my account per a trade...
THis means if you have $10,000 in your account you are only willing to lose $100.. which in turn is %1... So if you buy a stock at 100 and put a stop loss at 90 .. you have a %10 stop loss.. so you buy 10 shares... because if you get stopped out you only lose %1 of your total account...
No here is the problem.. with such a position sizing strategy w/ tight stops... if you bought a stock at 100 and have a stop at 99.. this position sizing model would force you to allocate your entire portfolio to that position.. which is suicide for overnight risk....
So... if you are a swing trader... too tight is not really so good.. because it would force you to allocate too many resources into one trade... The great benefit for tight stops is.. that if you are right and have a huge winner you will have a big gain as a multiple of your initial risk ...
Each setup or trade strategy you have.. should have a different risk profile...
For example... if you trade a pullback off a strong trend.. its best to use a tight stop because you will be wrong a few times.. then when and if the trend finally does resume.. you will make back everything plus a nice gain... so you will probably be right about %35 of the time... and when you are right should make atleast 3x your initial risk... which means you will have a 40 cent expectancy
If you are trading breakouts... then you need wide stops.. due to the increased volatility.. you will probably be right about %50 of the time with a 2x intial risk profit.. which is a 50 cent expectancy...
The problem with LGND... you are playing a very volatile stock and playing a momentum breakout with a tight stop... what risk profile does that fall into..get the point?
--MIKE
For example... if you trade a pullback off a strong trend.. its best to use a tight stop because you will be wrong a few times.. then when and if the trend finally does resume.. you will make back everything plus a nice gain... so you will probably be right about %35 of the time... and when you are right should make atleast 3x your initial risk... which means you will have a 40 cent expectancy
If you are trading breakouts... then you need wide stops.. due to the increased volatility.. you will probably be right about %50 of the time with a 2x intial risk profit.. which is a 50 cent expectancy...
The problem with LGND... you are playing a very volatile stock and playing a momentum breakout with a tight stop... what risk profile does that fall into..get the point?
--MIKE
CNF and ESI ... are classic volatility breakout play on huge volume... They are huge down black candles.. these types of plays require a wide stop.. because the volatility is great...
Look at your Cern trade... it was another example... you got stopped out because it was too tight... it needed a loose stop because it had exremely wild volatility..
I'll be reading and posting sometimes. I'm calling myself a swing trader. It's all I can do now. And though I do want to day trade for a spell, I will return to swing trading.
Position size? My problem was wanting to trade 1,000 but not being able to do it with decent companies. I do think position size is important, but 100 shares across the board while learning keeps the math/points consistent.
That said, I trade a $3-5 stock pretty regularly, I buy 300 shares, but usually scale out. I trade APPL, and it's just 100 shares. I wish I could trade more, I feel like I can predict what this one does. Still the most important thing to me is not getting ahead of myself and trying to trade more shares.
This week I've just had one trade:
3/31 Buy 100 APPL @ $14.10 (no hard stop, $14? looking for $14.75)
4/02 Sell 100 APPL @ $14.55
André
Position size? My problem was wanting to trade 1,000 but not being able to do it with decent companies. I do think position size is important, but 100 shares across the board while learning keeps the math/points consistent.
That said, I trade a $3-5 stock pretty regularly, I buy 300 shares, but usually scale out. I trade APPL, and it's just 100 shares. I wish I could trade more, I feel like I can predict what this one does. Still the most important thing to me is not getting ahead of myself and trying to trade more shares.
This week I've just had one trade:
3/31 Buy 100 APPL @ $14.10 (no hard stop, $14? looking for $14.75)
4/02 Sell 100 APPL @ $14.55
André
I understand now why position sizing is so important for you. If I understand correctly when you use large stops you lower your position to reduce your dollar risk. I use a fixe position size but I have a maximum lost per trade (now
) which is 60$ for 100 shares. I will follow up my trades to check if larger stops would have allow me to make more profits. I will also read the other thread regarding the set ups you use.
Thank you very much for your help. I really appreciate your comments. How long have you been trading? Do you mainly day trade or swing trade?
I have been swing trading many years... I dont daytrade..
Dont treat each trade the same... as $60 loss per 100 shares... Instead treat a certain % of your account as a loss.. and then adjust the position size accordingly to intitial risk...
Some stocks are more volatile than others.. some setups have different risk profiles as i mentioned above....
You need to have a solid position sizing strategy.. in order to make real $... thats why I dont day trade stocks or futures... Its much more difficult to position size using contracts than it is shares.... for an individual trader.. ALso.. day trading limits the amount of time you have a winner because you have to be flat at the end of the day...
goto this thread.. I debated endlessly why I dont believe daytrading is really worth is...
http://www.elitetrader.com/vb/showthread.php?threadid=15850
--MIKE
Dont treat each trade the same... as $60 loss per 100 shares... Instead treat a certain % of your account as a loss.. and then adjust the position size accordingly to intitial risk...
Some stocks are more volatile than others.. some setups have different risk profiles as i mentioned above....
You need to have a solid position sizing strategy.. in order to make real $... thats why I dont day trade stocks or futures... Its much more difficult to position size using contracts than it is shares.... for an individual trader.. ALso.. day trading limits the amount of time you have a winner because you have to be flat at the end of the day...
goto this thread.. I debated endlessly why I dont believe daytrading is really worth is...
http://www.elitetrader.com/vb/showthread.php?threadid=15850
--MIKE
04/04
Today I cannot follow the market until the closing.
ESI
I am comfortable wih my current postions except ESI. I am short and it is moving back up although the overall market is moving down. I am thinkng about closing the position but I will leave it... just to see. It looks like the stock was just consoldating yesterday. It was proably not a good idea to short it. In the future I will try to avoid these kind of set up. I will not short stocks that are above there 200day moving average.
New trade
-200 @ 42.91 and stoped out @ 43.28 : -78$
I wanted to take a trade before leaving... big mistake!!! I think the end of the day is the best time to trade my strategy.
Current position
+100 SEPR
-100 ESI
+100 LGND
-100 CNF
I will respond to your posts this tomorrow. Have a nice week-end!!
DT1
Today I cannot follow the market until the closing.
ESI
I am comfortable wih my current postions except ESI. I am short and it is moving back up although the overall market is moving down. I am thinkng about closing the position but I will leave it... just to see. It looks like the stock was just consoldating yesterday. It was proably not a good idea to short it. In the future I will try to avoid these kind of set up. I will not short stocks that are above there 200day moving average.
New trade
-200 @ 42.91 and stoped out @ 43.28 : -78$
I wanted to take a trade before leaving... big mistake!!! I think the end of the day is the best time to trade my strategy.
Current position
+100 SEPR
-100 ESI
+100 LGND
-100 CNF
I will respond to your posts this tomorrow. Have a nice week-end!!
DT1