My target price is where I realistically would expect the price to hit resistance(or support if I'm short). I would view the price action objectively, in addition to indicators & volume, etc., etc. to make a judgement on if the momentum has stalled in my direction. The 1:2 is a metric I use to establish if the risk is too great to the reward. Once I'm in the trade, my actual target price may never be hit, but I will be using other indicators to judge when to take profits.
Just a Newbie
- Thread starter steve1578
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My target price is where I realistically would expect the price to hit resistance(or support if I'm short). I would view the price action objectively, in addition to indicators & volume, etc., etc. to make a judgement on if the momentum has stalled in my direction. The 1:2 is a metric I use to establish if the risk is too great to the reward. Once I'm in the trade, my actual target price may never be hit, but I will be using other indicators to judge when to take profits.
yes, the stop is not a problem. We all know how much we can risk. It is written in stone. The target becomes the problem. Especially when it is going so bad that even two to one won't save you.
What is your approach?
Trading and "investing" are different animals ( and can have similar results ? ) IMO, the shorter the time frame, the more random and chaotic price movements become because of the tug of war between algos, institutional traders, soveriegn fund flows, knee jerk reaction to news flow, etc. And it is difficult to exploit any statistically significant patterns / seasonality from the data.
Some of the best odds to be had come from investment keying off a longer term trend reflecting the resilience, profitabilty, and superiority of the U.S. economy and companies. Stock universes within the U.S. equity markets that have shown the highest alpha premium over 90 years have been the small and mid cap value universes as per academic / empirical research *.
A suggestion would be to fund a Roth IRA with a portion of your assets ( contributing to it annually if you can ) and use it as a long term asset growth "bucket". Investing in a small mid cap value universe fund / ETF ( perhaps with the use of a simple, low turnover tactical strategy **) within a tax deferred setting, can provide one of the best methods towards long term compounding / asset growth. The other / another portion of the money can be used to trade / experiment with. The idea of compounding asset growth through the "holding" of alpha producing stock universes may not have the allure of trading, yet it has produced impressive results over the long term with little effort.
* https://docs.google.com/document/d/1kToqLWLISRk4n4YnSzv1hT5kBN54l5CvhwGgDwJKPJI/edit?usp=sharing
https://docs.google.com/document/d/1-_nQTfZG1aoIduZuvqCgJws3_ja_zHCuz4h6zLadUoo/edit?usp=sharing
** https://docs.google.com/document/d/1XxnEl6aAsU56Afkp_lXAKb8xGWq65wiY8iw3RGTtyuU/edit?usp=sharing
James
Director, Quantitative research
XXX
Boulder, CO
Some of the best odds to be had come from investment keying off a longer term trend reflecting the resilience, profitabilty, and superiority of the U.S. economy and companies. Stock universes within the U.S. equity markets that have shown the highest alpha premium over 90 years have been the small and mid cap value universes as per academic / empirical research *.
A suggestion would be to fund a Roth IRA with a portion of your assets ( contributing to it annually if you can ) and use it as a long term asset growth "bucket". Investing in a small mid cap value universe fund / ETF ( perhaps with the use of a simple, low turnover tactical strategy **) within a tax deferred setting, can provide one of the best methods towards long term compounding / asset growth. The other / another portion of the money can be used to trade / experiment with. The idea of compounding asset growth through the "holding" of alpha producing stock universes may not have the allure of trading, yet it has produced impressive results over the long term with little effort.
* https://docs.google.com/document/d/1kToqLWLISRk4n4YnSzv1hT5kBN54l5CvhwGgDwJKPJI/edit?usp=sharing
https://docs.google.com/document/d/1-_nQTfZG1aoIduZuvqCgJws3_ja_zHCuz4h6zLadUoo/edit?usp=sharing
** https://docs.google.com/document/d/1XxnEl6aAsU56Afkp_lXAKb8xGWq65wiY8iw3RGTtyuU/edit?usp=sharing
James
Director, Quantitative research
XXX
Boulder, CO
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oh, I don't pay much attention to another mans approach since it probably wouldn't fit my personality or mental make up. But I see no hope for a bracket trader and the sooner you can think outside of that mythical box the better.
Im not in the business of taking others' approaches for the same reason, was merely asking to continue the conversation. Regardless, thanks for the feedback.
well, the problem is stops. and also profit targets. I buy and hold (or sell and hold) small correlated positions and add to something everyday. Sometimes a winner sometimes a loser. And I just keep doing that until I run out of money or they make me an offer I just can't refuse. Then I get flat and take a nice long 8 hour vacation. And start all over again. It would be very difficult to make a living this way. You would need to trade a lot of money and it all, 100% (or more) is at risk. But the small returns have been remarkably consistent. Before that I spent my life cutting losses short and letting profits ride. Risk:Reward 1:infinity. That's the way to make a living trading. Just don't forget to quit while you are ahead and sock away a little profit in something conservative and boring like spy or bnd on a regular basis.
But if you already have a real job....
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My eventual goal is to trade full time, for now I'm saving as much possible with my full time job and building a nice asset structure for myself. Once Ive bettered myself enough to consistently pull profit, then I will go full time.
It's good of dream this business also as good and reliable business which each tarder will become own boss and without any other intervention, if you can making profit regularly hence might will get financial freedom, but I am still scared to treat as full time and still prefer as part time only
I know many part-time traders, but few full-time. It appears that making that transition is more difficult than some assume.