Spydertrader's Jack Hershey Equities Journal II
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There are a few other factors that i figured in on FTEK that tend to make me give it more wiggle room on vol parameters.
it is, in my estimation, on the fourth week of the handle in a 18 week cup with handle formation (IBD). I'm in early on this as the actual entry pivot point should be around $16.00. I'm sure it will let me know!
it is a strong stock that tends to hold price point even on low volume. I'm not at all happy with the vol this afternoon, but it also looks like everybody went home early as overall market vol numbers are extremely low.
it also doesn't tend to stay in DU long before breaking out.
these factors all made me jump on it when i saw a move up and analyze the trade later.
I will, of course, monitor closely for any heavy sell pressure, but in the absense of such, will probably hold through the weekend, despite low vol numbers on the day.
in addition, i've been trading this stock since feb 2005. bought my first shares @ 5.47, so i know its quirks well. it may well tell me just how cocky i'm getting with this issue
it has burnt me a few times, but in all it's been very good to me
it is, in my estimation, on the fourth week of the handle in a 18 week cup with handle formation (IBD). I'm in early on this as the actual entry pivot point should be around $16.00. I'm sure it will let me know!
it is a strong stock that tends to hold price point even on low volume. I'm not at all happy with the vol this afternoon, but it also looks like everybody went home early as overall market vol numbers are extremely low.
it also doesn't tend to stay in DU long before breaking out.
these factors all made me jump on it when i saw a move up and analyze the trade later.
I will, of course, monitor closely for any heavy sell pressure, but in the absense of such, will probably hold through the weekend, despite low vol numbers on the day.
in addition, i've been trading this stock since feb 2005. bought my first shares @ 5.47, so i know its quirks well. it may well tell me just how cocky i'm getting with this issue
it has burnt me a few times, but in all it's been very good to me
All flat. I have no positions in the trading account headed into the weekend. I have also moved my long term investment account into cash as well. Enjoy the weekend everybody.
- Spydertrader
- Spydertrader
Very good advice.
- Spydertrader
Hey Hershey team,
I was doing some musing about the Risk/Reward ratio in this system, and I realized that I had one sticky problem: I am having a very hard time defining the risk!
By using Ross's Rule (or what I understand of it), on the day of entry, we are accepting a 2% loss. After this, using the beginner method of Journal I, we're taking on up to a 5% loss. Is that right? Using this simple formulation, then the max risk of each trade is 5%.
But looking back over the trade results, and after re-reading Journal I to double-check, it looks like a 5% loss is extremely rare. In my limited trading of this method over the last few months, I've taken many 2% losses (some of which could have been avoided, some were just FBOs) but never taken a trade with more than this. After the first day, the trade has generally gone my way, or I've shut it down for a wash.
My understanding today is that a 5% loss represents a good, general maximum loss. Something that we may suffer from an overnight gap down or a bad beat. From some studies of the channel offset, it looks like most of these offsets come very close to 5%.
Does anyone here try to quantify what the risk/reward ratio is for a Hershey trade? What figures do you use for the risk?
I'm tempted to use 5% as my risk, but it really doesn't seem to properly reflect the nature of the trade.
Does anyone have any ideas or comments?
I was doing some musing about the Risk/Reward ratio in this system, and I realized that I had one sticky problem: I am having a very hard time defining the risk!
By using Ross's Rule (or what I understand of it), on the day of entry, we are accepting a 2% loss. After this, using the beginner method of Journal I, we're taking on up to a 5% loss. Is that right? Using this simple formulation, then the max risk of each trade is 5%.
But looking back over the trade results, and after re-reading Journal I to double-check, it looks like a 5% loss is extremely rare. In my limited trading of this method over the last few months, I've taken many 2% losses (some of which could have been avoided, some were just FBOs) but never taken a trade with more than this. After the first day, the trade has generally gone my way, or I've shut it down for a wash.
My understanding today is that a 5% loss represents a good, general maximum loss. Something that we may suffer from an overnight gap down or a bad beat. From some studies of the channel offset, it looks like most of these offsets come very close to 5%.
Does anyone here try to quantify what the risk/reward ratio is for a Hershey trade? What figures do you use for the risk?
I'm tempted to use 5% as my risk, but it really doesn't seem to properly reflect the nature of the trade.
Does anyone have any ideas or comments?
Hi Foible,
Here is how I limit risk. I try to limit my losses to 2% of my total account.
I divide my total account into 3 streams of money. On each stream I allow for about a 5% loss.
So if I had a total account of $10000.00, 2% loss would equal $200.00 per position.
Then divide the $10000.00 by 3 and get about $3300.00 per stream. I allow for about a 5% loss in one stream which would be about $165.00. So, I am still under my 2% rule for my total account and I have a little extra wiggle room . I need this extra wiggle room because many times, I lack the ability to ACT NOW.
As noted by Spyder, if I am unsure about a trade, I will go in with a small size and if it works in my direction, I will add to it. I have managed to limit my losses dramatically with this strategy and still learn to trade.
Here is how I limit risk. I try to limit my losses to 2% of my total account.
I divide my total account into 3 streams of money. On each stream I allow for about a 5% loss.
So if I had a total account of $10000.00, 2% loss would equal $200.00 per position.
Then divide the $10000.00 by 3 and get about $3300.00 per stream. I allow for about a 5% loss in one stream which would be about $165.00. So, I am still under my 2% rule for my total account and I have a little extra wiggle room . I need this extra wiggle room because many times, I lack the ability to ACT NOW.
As noted by Spyder, if I am unsure about a trade, I will go in with a small size and if it works in my direction, I will add to it. I have managed to limit my losses dramatically with this strategy and still learn to trade.
Gooch87,
Thanks for your reply. Right now, I'm allowing for a maximum of 1% loss (of my total account) per trade, and may move up from there after several months of success.
What I was wondering about was:
So it looks like you have the same take as I do, that a 5% loss is the max loss that we reasonably expect under this system. I suppose that would mean I would take a lot of 0.4R losses if I get stopped out on the first day.
Makes for funny accounting, but maybe this is just the nature of the beast. One of the many differences when switching from day trading to swing trading.
thanks.
Thanks for your reply. Right now, I'm allowing for a maximum of 1% loss (of my total account) per trade, and may move up from there after several months of success.
What I was wondering about was:
So it looks like you have the same take as I do, that a 5% loss is the max loss that we reasonably expect under this system. I suppose that would mean I would take a lot of 0.4R losses if I get stopped out on the first day.
Makes for funny accounting, but maybe this is just the nature of the beast. One of the many differences when switching from day trading to swing trading.
thanks.
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