Falling knives

[VictorS]

Quote from cashmoney69:

Not sure I understand...

1. Do you find a falling stock and short with the trend ?

2. Or do you wait for it to bottom before buying?

cm69

I wait. usually if the selling continues for a few days I look for something else.
Contrary to what many here have assumed, it usually bounces after the break then consolidates (although I don't watch the stock after I close out the trade).
Many assume (because it's a "falling knife')you are buying a stock as the price continues to fall...nope, never. If that were the case I'd be shorting instead.

 

[syswizard]

Quote from Goinglite:

I trade them. I trade falling knives and rising knives. The sharper the knife, the better.


http://www.dacharts.org/archives/GoingLite/GoingLite_style_writeup.htm

Goinglite

This is a good strat....as long as you've got a stoploss already in-place. Very similar to picking bottoms and tops in eRL futures....each entry order has a contingent stoploss order that fires immediately upon the fill.

 

[Bitstream]

Quote from mschey:

"Don't be soar.....buy some more!" That's my battle cry! Good to know that Bits and I think da' same!

funny how the most demonized methods seem to work better than those pushed by the so called gurus of money managements.

actually is not funny at all, pretty obvious instead.

 

[cashmoney69]

Victor, tell me what you think of ISRG ...this is a good falling knife stock.

 

[VictorS]

Quote from cashmoney69:

Victor, tell me what you think of ISRG ...this is a good falling knife stock.

Sorry I missed this post.

ISRG actually wouldn't fit my criteria. One thing I noticed is that it is selling off precipitously ( in an earlier post here I stated if it continues to fall I find another trade). One - two days is fine this one has closed down for four consecutive days. Also, its 50-day average volume is 954,000 I would prefer it at least double that. It's daily volume has increased each of the last three days. I would prefer to see volume dry down to about 500,000. As you can see there are several reasons I personally would have passed on this as a trade.
Also, i limit myself to NYSE.

On a brighter note, if this is a stock you own, I have been long stocks that are accused of patent infringement. It means nothing. This company has good looking fundamentals. I am not saying it won't bounce back. It just doesn't meet the criteria I seek.

 

[SteveD]

Something like the MOT and HLF situation is more to my liking....NYSE.....big down draft...CNBC talking....usually, but not always, where specialist opens stock is bottom price....all sellers gone....nothing but buyers.....get in...get out....


SteveD

 

[StockzTrader]

Quote from VictorS:

Anyone else here liked trading them?

My bread and butter! As an intraday trader I scoop up the cash everyday, both falling and rising.

A pre-screen is done the day before to position the probability in your favor. Then, using indicators, go long or short for one momentum cycle. Take the cash after each cycle.

Can't give away the store, but here is my watch list for 01/11/2007

Shorts:
BBI,ICE,AAPL,VOL,AMR,WYNN,NWS,ONNN,IPG,LVS,TER,CAL,JBLU,MGM,UAUA,XMSR,CME,BIDU,SSP,COO,YHOO,BOT,NYX,AGR,HANS,AA,URBN,FORM,NUAN,CHINA,CROX,KIM,SUNW,WFR,CY,SPWR,MHS,LRCX,MRVL,LLTC,AMLN,WDC,AL,FLS,AGIX,SHLD,NDAQ,LEAP,SNDK,CENX,RIMM,ISIL,NVDA

Longs:
CELL,SU,COP,QLGC,TEX,ACF,HOC,ARA,PTR,PWEI,DO,CHU,BRCM

The rest is "trading".

Best of success.

 

[SteveD]

StockzTrader,

That list of "shorts" has some very strong stocks, AAPL, ICE, BIDU etc etc....they may have a pull back...but, gosh, don't you think that is a very high risk, low reward trade??

I view the "falling knife" trade as one where the news/catalyst comes out of the "blue"...totally unexpected....fear and selling is first reaction.....always overdone......

Also, IMO, unless your are trading 1,000,000 shares a day....exposing your "style" is not going to affect the stock....


But good luck to you....

SteveD

 

[StockzTrader]

Quote from SteveD:

StockzTrader,

That list of "shorts" has some very strong stocks, AAPL, ICE, BIDU etc etc....they may have a pull back...but, gosh, don't you think that is a very high risk, low reward trade??

I view the "falling knife" trade as one where the news/catalyst comes out of the "blue"...totally unexpected....fear and selling is first reaction.....always overdone......

Also, IMO, unless your are trading 1,000,000 shares a day....exposing your "style" is not going to affect the stock....


But good luck to you....

SteveD

Hi Steve.

These are watch lists for me, which is the fist step.

The second step is to trade them. I'm looking for a small time period. You're correct, if looking at any of these for a long term play. My typical play is only seconds to one hour. You're very perceptive as I'm using $250k per trade in and out.

Yes, I have some losses like everyone. The key is how the stocks are traded. There is nothing magic in my watch lists, just better probability for an intraday trade.

Sucess to everyone in 2007!

 

[StockzTrader]

and, looking for "intraday falling knives", rather than daily.....