Quote from equitydaytrader:
i've been trading full time for about 2 mos. and i'm learning a lot everyday.
My strategy is to get in at the lowest price avail. and if the price goes lower i buy more at the next lowest price to effectively bring down my avg. price per share. sometimes its neccessary to hold a position over night and in rare cases for a couple days. so far so good.
today TIVO lost .55. I can't figure out why. The earnings reports don't come out til next week and i can't find any news headlines.
someone dropped 100k shares earlier today and the volume was at least at a 2 month high.
any1 know why this happened?
I recommend you learn some of the technical signals that cause traders to act.
TIVO hit a 52-week high on 10/26, after steadily making higher lows and higher highs above a rising 200-day moving average after a partial retracement of their June 3rd gap up. Trend-followers like this and will continue to buy dips that don't violate the trend.
Look at the pullback that ended on 11/03/09 after the 52-week high was put in. That pivot low was higher than the previous pivot low, and so buyers step back in, as expected, looking for a new high to be made.
But then throughout November price fails to even test the previous high, much less make a new high. On 11/27, previous support is broken: a lower low instead of a higher low. This is a big warning flag that the trend has ended.
On 12/15/09 price dips below the now-flat 200-day moving average. Another big warning flag. Short sellers will be looking to sell any rally that fails to break through the previous resistance level (the previous high), so as price moves up from that lower low, all eyes will watching to see what happens when price hits the 11.30 zone.
On 1/6 price fails to even test 11.30, pulling back off 11.15.
Conservative short-sellers waiting for a confirmed entry start selling, and longs who were still hoping the trend might resume are selling to take whatever profits they have.
As a day trader, you can play price long or short; but if you're swinging a position for 2 or more days, you are best to go with the new trend which is now down, looking to short any rally that pulls back from a lower high than the previous swing high.
By the way, I traded a strategy similar to yours when I first started out and because we were in a short term bull run, price always came back even if I averaged down or held a loser for a few days. Markets can change rapidly and 2008 taught me that the hard way.
I advise you to learn about support and resistance, rising and falling moving averages, and the importance of EXTREMELY strong risk management when counter-trend trading (such as not adding to losers), or you will experience some major pain.
