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fast
 
Reply Tue 20 Apr, 2010 12:26 pm
So, who here trades stock? Are you more of a buy and hold kind of person, or are you a get in and get out kind of person? In other words, what's your preferred hold times? I do not particularly like to hold a stock for more than 30 days, but I'll hold usually anywhere between 7 and 91 days. I've held for shorter times, and holding a little longer (maybe up to 100 days) isn't out of the question.

Although my tolerance for risk is (in my own assessment) moderate to high, I would be much more risk averse (and have much longer hold times) when dealing with any money set aside for retirement. In fact, despite my lack of aversion to risk, I believe playing it safe and conservative makes for a better plan when dealing with money that ought not be subjected to a higher possibility of being traded away--with retirement, as an example. Even still, I wouldn't endorse a buy and hold strategy ... not in today's volatile financial climate, especially when something as simple as using a 10-month moving average can beat the market time and time again.

My new passion is the stock market. Geez, I say new, but truth is, this month officially marks my third time back in the game. Yes, back before the new millennia, I was with an online broker (as I am now), but I got out. I was back in and out yet again (with yet another broker) a few years ago. Well, here I am again-news plans, new broker, new ways to lose money, lol. No, I'm not a newbie anymore, but I never let little things like that stand in way of making mistakes-my new euphemism for grade A blunders.

Anyhow, I had no real point to make by starting this thread. I just thought it might be nice to start one about stocks in general to see if anyone here who happens to like philosophy may also happen to like trading stocks.

PS: if you didn't buy BBI, you lost out on a nice run.
 
VideCorSpoon
 
Reply Tue 20 Apr, 2010 01:55 pm
@fast,
 
kennethamy
 
Reply Tue 20 Apr, 2010 02:44 pm
@fast,
fast;154560 wrote:
So, who here trades stock? Are you more of a buy and hold kind of person, or are you a get in and get out kind of person? In other words, what's your preferred hold times? I do not particularly like to hold a stock for more than 30 days, but I'll hold usually anywhere between 7 and 91 days. I've held for shorter times, and holding a little longer (maybe up to 100 days) isn't out of the question.

Although my tolerance for risk is (in my own assessment) moderate to high, I would be much more risk averse (and have much longer hold times) when dealing with any money set aside for retirement. In fact, despite my lack of aversion to risk, I believe playing it safe and conservative makes for a better plan when dealing with money that ought not be subjected to a higher possibility of being traded away--with retirement, as an example. Even still, I wouldn't endorse a buy and hold strategy ... not in today's volatile financial climate, especially when something as simple as using a 10-month moving average can beat the market time and time again.

My new passion is the stock market. Geez, I say new, but truth is, this month officially marks my third time back in the game. Yes, back before the new millennia, I was with an online broker (as I am now), but I got out. I was back in and out yet again (with yet another broker) a few years ago. Well, here I am again-news plans, new broker, new ways to lose money, lol. No, I'm not a newbie anymore, but I never let little things like that stand in way of making mistakes-my new euphemism for grade A blunders.

Anyhow, I had no real point to make by starting this thread. I just thought it might be nice to start one about stocks in general to see if anyone here who happens to like philosophy may also happen to like trading stocks.

PS: if you didn't buy BBI, you lost out on a nice run.


Mutual funds (no load) mostly. A few individual stocks. Oil rigs, gold. Just as a hedge. The market has been fine, so far. But I still have not made up my losses during the recent disaster.

---------- Post added 04-20-2010 at 04:46 PM ----------

VideCorSpoon;154580 wrote:


Ameritrade. What the hell are Japanese candlesticks? Or are you kidding?
 
VideCorSpoon
 
Reply Tue 20 Apr, 2010 03:34 pm
@kennethamy,
kennethamy;154589 wrote:
Mutual funds (no load) mostly. A few individual stocks. Oil rigs, gold. Just as a hedge. The market has been fine, so far. But I still have not made up my losses during the recent disaster.

---------- Post added 04-20-2010 at 04:46 PM ----------

Ameritrade. What the hell are Japanese candlesticks? Or are you kidding?
http://i41.tinypic.com/xgigqb.jpghttp://i40.tinypic.com/2vubnva.jpg
There are basic trends that develop that almost everybody sticks to. Essentially, you can really make an educated guess as to what the behavior of what the stock is going to do tomorrow, a month, etc. In this made-up stock chart, I have two uptrends, which are basically determined by higher highs and higher lows, support and resistance, which show the basic personality the stock has taken on (the level at which investors tend to get scared and run or buy back in), and an evening star, which is a technical pattern that almost always develops into a dive the next day.

This is just my own really simplistic take on the whole thing. This is a link to a very good tutorial;

Introduction to Candlesticks - ChartSchool - StockCharts.com

Also, stockcharts.com is an excellent place for historical stock data. They use different colors for the different bar graphs, but you get the idea. I use it 50 times a day if e-trade pro does not work out well for me on a particular stock.

But it so much deeper than this. Bollinger bands, Level 2 quotes (the stock market crystal ball), market makers, etc. It really is a fun (and profitable) pastime.
 
fast
 
Reply Tue 20 Apr, 2010 03:50 pm
@VideCorSpoon,

I gotta tell ya, I don't know near as much about the stock market as I would like to, and based on what you have told me so far, I believe you know far more about it than I do, but I can muster what I believe to be some at-least-halfway sensible opinions. You speak of day trading, and obviously enough, if one is a day trader, then one is what I would call a short-term trader, but not all short-term traders are day traders, as a true day trader is commonly regarded as one that closes his or her positions before the market closes thus protecting themselves from any gap that may occur overnight. I, myself, am not a day trader. I'm not opposed to it, but it's a bit too technical and a bit too time-intensive for my tastes; that's not to say I wouldn't take it up in a heartbeat had I a system in place with a high promise of success. I have bought and sold stock in the same day several times, but I fall outside the scope of being a day trader.

It's funny you should mention being in two places at once. I too find that if I am not watching stocks, I am browsing a philosophy forum or two. Truth be known, today (and all day), I have tabbing back and forth between here and my brokerage account.

You talk about fundamental analysis and technical analysis. I'm proficient in neither, and I could certainly stand to learn a thing or two, and though I believe fundamental analysis is critical to long haul success (for people who have long time horizons), I find little use for it for short-term technical plays. I need to strengthen my ability to analyze the fundamentals of a company (like I was taught to do in school), but so far, I have not done so. Maybe I need more discipline.

You also speak of going long and short, and I gotta tell ya, I do believe (I really do) that people who trade need to learn to trade short, mainly because it will help them to be better traders on (and get this) long trades. See, knowing how to identify trend reversals can have a major impact (to say the least) on timing their trades. This doesn't mean that one ought to get a margin account and trade short, however. I am of the opinion that if a person cannot successfully trade long, they have no business attempting to utilize the leverage afforded to them with margin accounts. I don't think the risk is worth the potential reward for those that do not know exactly what they are doing. That being said, it's sad to say that I don't trade short. I need more skill and more confidence in my trading first.

[QUOTE]My trading patterns usually depend on the types of stocks that I am trading. If I am doing a basic buy and sell stock, I usually hold it for a few weeks unless it is a promising company. And of course there were some very good exceptions, like when BIDU (Baidu is china's version of google) dropped during the 4th quarter in 2008 to around $110! (currently trading at $634).[/QUOTE]

Although I'm familiar with a few actual trading patterns (e.g. pull backs in swing trading), the strategy that I'm attempting to employ, strangely enough, doesn't require the identification of individual stock trading patterns.

[QUOTE]If I am doing short selling, then I never keep the stock for more than a few hours (I have been the victim of more than a few short squeezes). [/QUOTE]

I hear that! Can't say that I rightly blame you. Another thing that I don't particularly care for when it comes to trading short is the obligation factor. Silly, I know, but I don't like the actual creation of the obligation that I have to purchase shares. When going long, I don't have to sell. I can watch them drop and drop until they're gone if I so choose. I will say this though. You may actually stand a better chance going short than going long so long as the market as a whole is declining. For example (and I am forever a fan of the S&P), plot the 7sma and 30ema for SPX (or .INX etc). If the 7 falls below the 30, then you may find that you'll fare better as a whole going short than the other way around.

[QUOTE]And unfortunately, it has been a lot more difficult to pick up reserve shares for shorting now that more and more people are doing it. Options are neat (especially short options) since you can use options as a hedge in case of a misplaced investment. I do quite a few pinksheet otc's (which is commonly referred to as penny stocks) and I have made a lot of money doing that (look at HEB Hemispherex biopharma a year ago when it went from sub penny to over $4!) [/QUOTE]

I've never done options. By the way, I got a question about SPY. I hear people talk about calls and puts when trading it, but can't we buy and sell SPY without ever having to deal with calls and puts? In other words, can it be both true that I can choose to never trade options yet still trade SPY?

I haven't done any OTC's. The vast amount of my trades (you'll be surprised to hear) is on the NYSE. That should be surprising because it may seem unlikely given that most people wouldn't necessarily lean heavy on the NYSE over the NASDAQ.

[QUOTE]But given the current investing climate, it is not really a good idea to be in long for much of anything now-a-days, at least until consumer confidence picks up and the market comes to full correction.[/QUOTE]

I try (or least have tried) to be a supporter of staying in for the long haul, but I just can't bring myself to do it anymore. A cursory glance of the S&P charted over the last 20 years should explain why. Past performance over the last 50-70 years just doesn't do much for my long-term perspective when the last 15 years have performed as they have.

[QUOTE]But anyway, tell me your thoughts on all this. I don't get much opportunity to talk stocks with people. Are you a fan of fundamental analysis? In my opinion, I really don't pay that much attention to it anymore because all the fundamentals (like price per share, Alphas, and stuff like that) have been severely thrown off in the crash. I tend to pay more attention to technical's (Japanese candlesticks in particular) and pattern analysis. [/QUOTE]

Because of my short-term trading strategy, I have a strong focus on technicals and very little on fundamentals. More important than technical indicators is of course price action. I believe that an enormous amount of insight can be gained by being in-tune with the stock price and its movement.

When I chart my stocks, I use candlesticks almost exclusively. There's a lot information regarding sentiment to be uncovered by understanding candlesticks.

[QUOTE]What kind of information resources do you use? Also, what are your favorite trading platforms? I have a whole bunch of accounts and recommendations![/QUOTE]Because I don't day trade, and because I generally keep my hold time to over a week, I find that I need not be overly concerned with platforms or things like level 2 quotes. I'm currently with Zecco.
 
sometime sun
 
Reply Tue 20 Apr, 2010 03:59 pm
@fast,
I tend to think 'stocks' is a game of Deal or no Deal, you are lucky if you win, unlucky if you dont.
Hold onto a box or open one.

I can just imagine you guys sitting by a hearth somewhere with cigars and neat malt scotch in crystal glasses.Smile
 
VideCorSpoon
 
Reply Tue 20 Apr, 2010 04:51 pm
@sometime sun,
fast;154606 wrote:

I gotta tell ya, I don't know near as much about the stock market as I would like to, and based on what you have told me so far, I believe you know far more about it than I do, but I can muster what I believe to be some at-least-halfway sensible opinions. You speak of day trading, and obviously enough, if one is a day trader, then one is what I would call a short-term trader, but not all short-term traders are day traders, as a true day trader is commonly regarded as one that closes his or her positions before the market closes thus protecting themselves from any gap that may occur overnight. I, myself, am not a day trader. I'm not opposed to it, but it's a bit too technical and a bit too time-intensive for my tastes; that's not to say I wouldn't take it up in a heartbeat had I a system in place with a high promise of success. I have bought and sold stock in the same day several times, but I fall outside the scope of being a day trader.
fast;154606 wrote:
It's funny you should mention being in two places at once. I too find that if I am not watching stocks, I am browsing a philosophy forum or two. Truth be known, today (and all day), I have tabbing back and forth between here and my brokerage account.

It get monotonous after a while as I'm sure you know. That's why I usually do most of the heavy trading in the morning when people are foolish with their money.

fast;154606 wrote:
You talk about fundamental analysis and technical analysis. I'm proficient in neither, and I could certainly stand to learn a thing or two, and though I believe fundamental analysis is critical to long haul success (for people who have long time horizons), I find little use for it for short-term technical plays. I need to strengthen my ability to analyze the fundamentals of a company (like I was taught to do in school), but so far, I have not done so. Maybe I need more discipline.

Technical analysis is not too hard, but I think it is essential. Otherwise, you are sailing blind in a very perilous sea. Interday trading uses up to the second technical readouts, but you can survive of off less technical's in the longer run if you have a good idea about the company you are interested in.

fast;154606 wrote:
You also speak of going long and short, and I gotta tell ya, I do believe (I really do) that people who trade need to learn to trade short, mainly because it will help them to be better traders on (and get this) long trades. See, knowing how to identify trend reversals can have a major impact (to say the least) on timing their trades. This doesn't mean that one ought to get a margin account and trade short, however. I am of the opinion that if a person cannot successfully trade long, they have no business attempting to utilize the leverage afforded to them with margin accounts. I don't think the risk is worth the potential reward for those that do not know exactly what they are doing. That being said, it's sad to say that I don't trade short. I need more skill and more confidence in my trading first.

For anyone else who doesn't know about what fast and I are talking about, when you buy a stock and sell a stock for a profit, that is standard trading. When you short sell, what you are actually doing is investing in a stock you think you will lose money. For example, suppose I have a hunch that company XYZ is going to tank bad. I enter a "sell short order" which actually borrows shares from the broker and I (in a margin account) take those borrowed shares and hold them. The order registers as a sell of, say, 1000 shares. The stock price goes down even though I technically bought them. When the stock goes down enough to where I would make a good profit, I "buy to cover," meaning I take the shares that borrowed and sell them back to the broker for a lower discounted price. I in turn pocket the difference.

fast;154606 wrote:
Although I'm familiar with a few actual trading patterns (e.g. pull backs in swing trading), the strategy that I'm attempting to employ, strangely enough, doesn't require the identification of individual stock trading patterns.
That's awesome, what kind of strategy is it!

fast;154606 wrote:
I hear that! Can't say that I rightly blame you. Another thing that I don't particularly care for when it comes to trading short is the obligation factor. Silly, I know, but I don't like the actual creation of the obligation that I have to purchase shares. When going long, I don't have to sell. I can watch them drop and drop until they're gone if I so choose. I will say this though. You may actually stand a better chance going short than going long so long as the market as a whole is declining. For example (and I am forever a fan of the S&P), plot the 7sma and 30ema for SPX (or .INX etc). If the 7 falls below the 30, then you may find that you'll fare better as a whole going short than the other way around.
fast;154606 wrote:
I've never done options. By the way, I got a question about SPY. I hear people talk about calls and puts when trading it, but can't we buy and sell SPY without ever having to deal with calls and puts? In other words, can it be both true that I can choose to never trade options yet still trade SPY?
SPY is a NYSE ETF, meaning that it is a mutual fund (exchange traded fund) traded via the New York stock exchange with its own ticker. As a mutual fund, it is open to both regular trading (although I think there is some short protection) and issues options contracts. I just looked up SPY in power e-trade pro options scanner, and there are quite a few options out on it. Suffice to say, you could do wither or. Many companies (and mutual funds) offer options as well as having a base stock in trade. You do not specifically taking part in the options trading, but the mutual fund managers are most likely doing options contract with the money you invest in the stock. You fund their options contracts.

fast;154606 wrote:
I haven't done any OTC's. The vast amount of my trades (you'll be surprised to hear) is on the NYSE. That should be surprising because it may seem unlikely given that most people wouldn't necessarily lean heavy on the NYSE over the NASDAQ.

Pink sheets are extremely dangerous, but also very lucrative if you pick the right one. It is not uncommon to get 100%,500%,1000% return on your investment in some of these companies (and this could be over the course of a few days!). Most of these companies as it turns out fail, but many people throw tons of money hoping that they reach high levels. I find it a very good place to scoop up a few dollars now and then.

fast;154606 wrote:
I try (or least have tried) to be a supporter of staying in for the long haul, but I just can't bring myself to do it anymore. A cursory glance of the S&P charted over the last 20 years should explain why. Past performance over the last 50-70 years just doesn't do much for my long-term perspective when the last 15 years have performed as they have.
See, I don't look as far back as that. My range goes back probably 5 years max.

fast;154606 wrote:
Because of my short-term trading strategy, I have a strong focus on technicals and very little on fundamentals. More important than technical indicators is of course price action. I believe that an enormous amount of insight can be gained by being in-tune with the stock price and its movement.
Defintely!

fast;154606 wrote:
When I chart my stocks, I use candlesticks almost exclusively. There's a lot information regarding sentiment to be uncovered by understanding candlesticks.
Completely agree. Some prefer the mountain charts, but that doesn't give you nearly enough information.

fast;154606 wrote:
Because I don't day trade, and because I generally keep my hold time to over a week, I find that I need not be overly concerned with platforms or things like level 2 quotes. I'm currently with Zecco.


I use a few accounts.

I do my mid range stocks on Scottrade. Even though they have really fudged me over in the past with restricted lists, they do have a relatively fast execution time on their orders and I am very fond of their mobile trading platform for the phone.

I do my short term trading on Sogo. If you don't have a lot of money or are just getting started, go through Sogo. Heck, even if you have a lot, use Sogo. They just acquired a year ago genesis securities, which means that they are their own clearing house. So where you would pay $7-12 bucks per trade, sogo only charges $3-4 per trade. This adds up after a while. They also have phenomenal options software to use for free. They also have nearly limitless amounts of short shares to reserve. Food for thought.

I do my long term stocks in e-trade. E-trade is by far one of the most competent companies as ar as software is concerned. If you want to have the best of software, then you absolutely need power e-trade pro. It costs $100 a month, but if you trade more than a few dozen times a quarter, they give it to you for free. They are also the ones that give you access to level 2 quotes.

Which brings me to addressing level 2 quotes.USE LEVEL 2 QUOTES. It is by far the most useful thing you could ever use in stock trading, especially as far as day trading is concerned. When I say level 2 quotes is a crystal ball in the stock market, it is the closest thing to one. Think of level 2 quotes like this. You have a gigantic pool of investors that are on the outside of this huge building clamoring to buy and sell this or that from the guys on the inside of the house. You then have a few people that are looking through the windows, watching what the people on the inside are doing. The people on the inside are the major traders, the guys on the floor of the stock exchange. Level 2 quotes enable you to take your place as one of those guys in the widow. You will be able to know minutes in advance whether or not a stock will climb or sink. You have the ability to sell your shares before the stock tanks, and buy shares before the stock climbs. I use this tool to make my quota in the morning and it works 9 times out of 10. I have never lost major money when using this tool. As a fellow stock market adventurer, I would genuinely urge you to reconsider it
 
kennethamy
 
Reply Tue 20 Apr, 2010 05:22 pm
@VideCorSpoon,
VideCorSpoon;154600 wrote:
http://i41.tinypic.com/xgigqb.jpghttp://i40.tinypic.com/2vubnva.jpg
There are basic trends that develop that almost everybody sticks to. Essentially, you can really make an educated guess as to what the behavior of what the stock is going to do tomorrow, a month, etc. In this made-up stock chart, I have two uptrends, which are basically determined by higher highs and higher lows, support and resistance, which show the basic personality the stock has taken on (the level at which investors tend to get scared and run or buy back in), and an evening star, which is a technical pattern that almost always develops into a dive the next day.

This is just my own really simplistic take on the whole thing. This is a link to a very good tutorial;

Introduction to Candlesticks - ChartSchool - StockCharts.com

Also, stockcharts.com is an excellent place for historical stock data. They use different colors for the different bar graphs, but you get the idea. I use it 50 times a day if e-trade pro does not work out well for me on a particular stock.

But it so much deeper than this. Bollinger bands, Level 2 quotes (the stock market crystal ball), market makers, etc. It really is a fun (and profitable) pastime.


You are a Quant, and I am out of your league. It looks a lot better than darts, but how does it measure up to darts? Have you any figures? Interesting stuff, though. I thought that "Japanese candlesticks" was a joke. Shows how much I know.
 
VideCorSpoon
 
Reply Tue 20 Apr, 2010 05:32 pm
@kennethamy,
kennethamy;154643 wrote:
You are a Quant, and I am out of your league. It looks a lot better than darts, but how does it measure up to darts? Have you any figures? Interesting stuff, though. I thought that "Japanese candlesticks" was a joke. Shows how much I know.


Honestly, I have not even scratched the surface of it after so many years of reading about it. I suppose the more familiar you get with the basic patterns, the more you come to see the additional patters and repetitions in those patterns. It like lottery numbers, you can analyze it down to patterns and so on, but you end up coming back to the gamblers fallacy. Perhaps thats whats happening with stocks, just that I tend to think its a lot more accurate because the odds are literally 50:50. 50% of the time I win every time! LOL!

Also, given the odds and variables, you have a better chance succeeding in the stockmarket than getting a perfect game in darts.
 
fast
 
Reply Wed 21 Apr, 2010 07:25 am
@kennethamy,
kennethamy;154643 wrote:
You are a Quant, and I am out of your league. It looks a lot better than darts, but how does it measure up to darts? Have you any figures? Interesting stuff, though. I thought that "Japanese candlesticks" was a joke. Shows how much I know.

Everytime I hear "darts" in a conversation about stocks, I think of the monkey.

[INDENT]In 1988 the Wall Street Journal began a contest that was inspired by Burton Malkiel's book A Random Walk Down Wall Street. In the book, the Princeton Professor theorized that "a blindfolded monkey throwing darts at a newspaper's financial pages could select a portfolio that would do just as well as one carefully selected by experts."
[/INDENT]
 
kennethamy
 
Reply Wed 21 Apr, 2010 07:31 am
@VideCorSpoon,
VideCorSpoon;154652 wrote:


Also, given the odds and variables, you have a better chance succeeding in the stockmarket than getting a perfect game in darts.


I hope so. But several newspapers, every so often, have people throw darts randomly (not aiming) at a board with stocks selected by experts. the claim is that darts, thrown randomly, often beat the predictions of experts for the same stocks.
 
salima
 
Reply Wed 21 Apr, 2010 08:36 am
@fast,
mutual funds are for women and old folk-i am so qualified. saw my father lose a lot of money, too...i am better than him. had some real fun in the indian market-but only penny ante stuff.
 
VideCorSpoon
 
Reply Wed 21 Apr, 2010 08:51 am
@salima,
I really wouldn't be surprised if there are people on the business channels that are just throwing darts at the wall. In fact, it is a lot more sinister than that. Many of these people on tv and on blogs are actually paid in stock/options/cash to to continually talk about these stocks and gather hype. This is the boiler-room effect. And it is very unfair to a point, but the SEC is very choosy about who manipulates the market and who doesn't.

Which actually brings me to an interesting factoid which is that contrary to public opinion which may suspect it, there is visible evidence everyday that the market is being manipulated by power players/market makers, etc. For example, in the picture below that I posted of the general setup I use, in the level 2 quotes, you will see a whole line of 100 shares going through. You think to yourself, ok, that seems normal. But when you see it with penny stocks, and the combined totally is around $2.00 for the share value and $12 for the transaction costs, you start to wonder. As it turns out, there are groups of people who jump onto these stocks and send messages to one another, in the form of stock trading. Via level 2 quotes, they are able to say "hey, I need more shares, some of you guys sell, then everyone else will sell, and then we will all get in at a lower prices" This is seen in level 2 as ~100 (in red). There are a lot more codes, but it is amazing what you can see.

Also, this is what the e-trade pro platform looks like with all the neat applications in case you anyone is curious (fast you may really find it interesting). I don't know what Zecco offers, but it may look something like sogo.


http://i39.tinypic.com/152nzhg.jpg
http://i43.tinypic.com/29yi3o4.jpg
 
Owen phil
 
Reply Wed 21 Apr, 2010 09:23 am
@fast,
I think a good way to play the stock market is to follow big winners such as Warren Buffet.

Technical analysis is important because so many people use it.
 
VideCorSpoon
 
Reply Wed 21 Apr, 2010 09:38 am
@Owen phil,
Owen;154875 wrote:
I think a good way to play the stock market is to follow big winners such as Warren Buffet.

Technical analysis is important because so many people use it.


I completely agree with you following big players like Warren Buffet. Incidentally, Buffet's stock Berkshire Hathaway (BRK.A) is currently trading at $118,600 per share. Buffet is a mover and shaker, he can seriously move the market in any direction he wants if he felt like it. May we all be so fortunate! Interesting little tidbit on Warren buffet, he did an extremely risky long short-sell a few years back in some monex future and doubled his multi-billion dollar fund over the course of a few months. We are talking 100 billion one day and 200 billion the next (which I'm sure the company is worth substantially more than that). LOL!
 
fast
 
Reply Wed 21 Apr, 2010 10:39 am
@VideCorSpoon,
[QUOTE=VideCorSpoon;154627]And this is an important thing to impart to you and anyone who trades on minor platforms, which is to watch out for restricted lists

I'm not sure I understand what you mean when you say, "watch out for restricted lists." I thought I did at first, but I think you may be talking about something I'm not familiar with.

As I understand it, some online stock brokers do not broker all stocks, so (and in analogy) just as all furniture companies do not sell all brands of furniture, it may be that I may stumble across a stock that I can't trade with my broker because my broker doesn't 'carry' it--just like I couldn't buy a brand of furniture from a particular furniture company that doesn't carry it.

So, when you tell me to "watch out for restricted lists," I think you're telling me to not trade a stock with a broker that doesn't carry it, but then again, how could I if it doesn't carry it? Because of that, I'm afraid I don't know what you mean.

[QUOTE]Also as a warning in case you do not know about it, if you hold an account under $25,000, you are limited to 3 full day trades a week (buy and sell on the same day). After that, you are released from the restriction. [/QUOTE]Is that Mon-Fri, or is it a rolling week? For example, if I day trade Wednesday, Thursday, and Friday, that's my three for the week, but if I also day trade the following Monday, then even though it's a different week, it is a forth trade in the last 5 days the market was open.

[QUOTE]Technical analysis is not too hard, but I think it is essential. Otherwise, you are sailing blind in a very perilous sea.[/QUOTE]I make a distinction between traders and investors, and I think the degree to which technical analysis is important increases for those with relatively shorter hold times, so for you as a day trader, I am in complete agreement that trying to day trade without a good understanding of technical analysis is foolhardy. I like your analogy of sailing blind in a very perilous sea.

[QUOTE]That's awesome, what kind of strategy is it![/QUOTE]I think of individual stock exchanges as a club, each with their own criteria for remaining a member (an actual traded company) of the club. Because each club has their own requirements for its members to remain listed, I believe (if we look hard enough) that we should see an overall pattern from the stocks in one club that isn't present for other clubs. It is my hope that I can detect and exploit such a pattern enabling me to make significant gains.

My biggest fear is that I have failed to properly take into account prior delistings. My biggest weakness right now is my inability to backtest stocks that no longer trade on the NYSE.



Yes, anybody can beat the market. Anybody can get lucky and beat the market. It's so so easy. But, fewer people can beat it two years in a row. How many can at least match it five years in a row? A lot, but many don't even though they can, and there's a reason for that-I'll get to it shortly. After 20 consecutive years of trading and investing, who can stand up and say that they have outperformed the market on average? Very few!

However, it's so so easy to match the market. All you have to do is buy into an index fund; something like VFINX. Or, if you want to trade it using an ETF, then you can buy and sell SPY--something I mentioned before.

So, why do so many people underperform when it's so easy to match? Greed is a simple answer. More accurately, it's because they are more ambitious and want to outperform the market. Though it's easy to do in any given year, it's treacherously difficult to successfully do so over the course of many years. There's just too many coulda's, woulda's, and shoulda's.

[QUOTE]See, I don't look as far back as that. My range goes back probably 5 years max. [/QUOTE]I think it may be a habit of mine, but I think it's a good habit. I always (well, almost always) first look at the longest time frame possible. Then, I zoom in one notch (or timeframe) at a time until I have viewed charts from the longest time frame to the shortest.

[QUOTE]Food for thought. [/QUOTE]Thanks.

[QUOTE] If you want to have the best of software, then you absolutely need power e-trade pro. It costs $100 a month, [/QUOTE]
This has officially been written down in my notes.

[QUOTE]As a fellow stock market adventurer, I would genuinely urge you to reconsider it[/QUOTE]If I were the typical short-term trader that bought based on the technicals of individual stocks, I most certainly would. I greatly appreciate your advice by the way, and before it's all over, I'm probably going to take it and use it. Thanks.

---------- Post added 04-21-2010 at 12:54 PM ----------

kennethamy;154836 wrote:
I hope so. But several newspapers, every so often, have people throw darts randomly (not aiming) at a board with stocks selected by experts. the claim is that darts, thrown randomly, often beat the predictions of experts for the same stocks.

Did you see my post I made six minutes prior to this? On my computer, your post went to the next page.
 
VideCorSpoon
 
Reply Wed 21 Apr, 2010 12:19 pm
@fast,
fast;154888 wrote:
I'm not sure I understand what you mean when you say, "watch out for restricted lists." I thought I did at first, but I think you may be talking about something I'm not familiar with.

As I understand it, some online stock brokers do not broker all stocks, so (and in analogy) just as all furniture companies do not sell all brands of furniture, it may be that I may stumble across a stock that I can't trade with my broker because my broker doesn't 'carry' it--just like I couldn't buy a brand of furniture from a particular furniture company that doesn't carry it.

So, when you tell me to "watch out for restricted lists," I think you're telling me to not trade a stock with a broker that doesn't carry it, but then again, how could I if it doesn't carry it? Because of that, I'm afraid I don't know what you mean.


Restricted lists are comprised of stocks that the broker decides that (at certain times of their choosing) to disallow buying, selling, buying and selling, holds, short selling, etc. Those stocks are not completely taken off the lists, just put on hold for whatever reason. For example, suppose I have been trading this stock called HEB, and I have for let's say a few months been heavily trading it. There have been no previous problems with it. For some reason, and when I say some reason any old reason, from a bad rumor to an SEC halt), the stock gets put on the list. It is entirely too frustrating if you are playing with a stock and then it makes this list. But all brokers are different. Scottrade has a huge restriction clearing list, but e-trade has a small one. So to make it clear, a restricted stock is any stock that they allow you to trade, but then all of the sudden don't, and then when they feel like it, lift the restriction (if they ever do).

fast;154888 wrote:
Is that Mon-Fri, or is it a rolling week? For example, if I day trade Wednesday, Thursday, and Friday, that's my three for the week, but if I also day trade the following Monday, then even though it's a different week, it is a forth trade in the last 5 days the market was open.


As I understand it, it is actually a rolling week. But this is only so far as trading on the same day. You could buy on Monday and sell on Tuesday with no penalty. But if you do day trade more than three times a week and you are under 25k, you get up to three warnings for the year. After that, you may be screwed if you have to sell and you cannot.

fast;154888 wrote:
I make a distinction between traders and investors, and I think the degree to which technical analysis is important increases for those with relatively shorter hold times, so for you as a day trader, I am in complete agreement that trying to day trade without a good understanding of technical analysis is foolhardy. I like your analogy of sailing blind in a very perilous sea.
fast;154888 wrote:
I think of individual stock exchanges as a club, each with their own criteria for remaining a member (an actual traded company) of the club. Because each club has their own requirements for its members to remain listed, I believe (if we look hard enough) that we should see an overall pattern from the stocks in one club that isn't present for other clubs. It is my hope that I can detect and exploit such a pattern enabling me to make significant gains.


You would definitely like fundamental analysis then. Fundamental analysis essentially lets you find out each of the members social security numbers. LOL!

fast;154888 wrote:
My biggest fear is that I have failed to properly take into account prior delistings. My biggest weakness right now is my inability to backtest stocks that no longer trade on the NYSE.


Delistings may be something to look into. And speaking of back-testing, e-trade pro give you this excellent tool that lets you double check your own technical strategy and then back test it over the complete history of the stock, giving you a percentage of success. I have used just a few times, but it is still a pretty cool feature.

fast;154888 wrote:
I mean that I like it as a benchmark. I can't substantiate these numbers, but unless I'm sadly mistaken, I believe about 90% of the people who trade/invest underperform the market. I believe 9% of the people match the market, and I believe 1% of the people outperform the market. Overtime, that is!

Yes, anybody can beat the market. Anybody can get lucky and beat the market. It's so so easy. But, fewer people can beat it two years in a row. How many can at least match it five years in a row? A lot, but many don't even though they can, and there's a reason for that-I'll get to it shortly. After 20 consecutive years of trading and investing, who can stand up and say that they have outperformed the market on average? Very few!

However, it's so so easy to match the market. All you have to do is buy into an index fund; something like VFINX. Or, if you want to trade it using an ETF, then you can buy and sell SPY--something I mentioned before.

So, why do so many people underperform when it's so easy to match? Greed is a simple answer. More accurately, it's because they are more ambitious and want to outperform the market. Though it's easy to do in any given year, it's treacherously difficult to successfully do so over the course of many years. There's just too many coulda's, woulda's, and shoulda's.


I think you may be right on the percentage of people who underperform the average (also the lipper average). Although, thinking on it, I would wonder why so many people invest in the first place.

As to beating the market, in my experience, it is not an objective to beat the market, only get slightly ahead. For example, when I day trade, I set a strict goal of $250 a day. When I reach that amount, I either sell right off the bat (in the case of short selling) or set a trailing stop and see how much money I can get without losing my quota. Greed is definitely the enemy in all of this. It is always best to have a goal, stick to the goal, and in many cases sell when the goal is reached. You could make a lot more, but then you could lose everything that you made to begin with. This has many inherent strategies. Like when a lot of people set a sell stop (sell their shares) at $2.50, I always make sure a short change myself by at least 12 cents (or some odd, uneven number) the reason for this is because a large majority of people trade in rounded increments. When they do, if a stock reaches a price, everybody want to sell, the exchange is flooded, and you end up getting substantially less than if you had sold just a little earlier. LOL! I could go on for pages of little tidbits I picked up along the way, but I suppose its not that interesting.

fast;154888 wrote:
I think it may be a habit of mine, but I think it's a good habit. I always (well, almost always) first look at the longest time frame possible. Then, I zoom in one notch (or timeframe) at a time until I have viewed charts from the longest time frame to the shortest.

It's certainly not a bad habit at all. In fact, I would say the only thing you are guilty of is being thorough.

fast;154888 wrote:
This has officially been written down in my notes.


Awesome, when you do get it, let me know if you need help figuring it out or developing particular presets. One preset I have found very useful is MACD alerts (trading on the moving average, convergence, divergence line). A lot of pros use this approach since it utilizes volumetric functions.

fast;154888 wrote:
If I were the typical short-term trader that bought based on the technicals of individual stocks, I most certainly would. I greatly appreciate your advice by the way, and before it's all over, I'm probably going to take it and use it. Thanks.


Not a problem at all, I love talking about all this. Again, if you have any issues or questions about the software, let me know.

Also, and this is a big IF if you wanted to go this far, there is actually this controversial guy that does tutorials on stock trading in an aggressive way. He provides not only tutorial videos and forum services, but also alerts of stocks that he (and subsequently the rest of his membership) take part in. I have been a member of his alerts for a while and I have seldom lost (mostly because of the huge following he has). To a point, he actually makes the market move because of how many subscribers he has. If you would like to know more, I'll PM his name.
 
prothero
 
Reply Wed 21 Apr, 2010 05:22 pm
@fast,
In any given year only about 20% of hand picked professionally managed mutal funds outperform market indexes as a whole.

For most investors diversified balanced portfolios, which are age adjusted and periodically rebalanced will outperform any individual investment guru or actively managed fund over the long term.

There is abundant evidence that trying to time markets, and outperform the market as a whole over long periods of time is futile.
A random walk down wall street. Winning the Losers game, etc.
There are no safe investments and risk and reward are closely linked which is why diversification and rebalancing are essential.

Day trading and technical analysis is not too far from a trip to your friendly casino. Gamblers tend to remember their wins and forget their losses whereas the more conservative among us hate to lose more than we love winning.

If there were a sure fire technical method to making money by timing markets and picking winners you can bet everyone would be doing it including the professional portfolio managers. There is not and by the time you get done churnning your portfolio and paying short term capital gains taxes you could have done better with indexes and long term gains. Passive balanced indexing is the smart game for the individual investor. One can and should adjust your portfolio based on macro economic factors like PE10, inflation and unemployment but leave timing individual stocks to the enthusiasts and the gamblers.
 
kennethamy
 
Reply Wed 21 Apr, 2010 05:46 pm
@Owen phil,
Owen;154875 wrote:
I think a good way to play the stock market is to follow big winners such as Warren Buffet.

Technical analysis is important because so many people use it.


I think that people who play the stock market are going to lose money. They should be serious about it.

---------- Post added 04-21-2010 at 07:53 PM ----------

prothero;155021 wrote:


There is abundant evidence that trying to time markets, and outperform the market as a whole over long periods of time is futile.
A random walk down wall street. Winning the Losers game, etc.
There are no safe investments and risk and reward are closely linked which is why diversification and rebalancing are essential.



So they say, and I suppose it is the received wisdom. But there are a lot of people who do not invest into index funds, and they make a lot of money, anyway. They beat the market. Of course there are no safe investments (except treasury bonds, and money markets, but no money is made from them). It is clear that risk and making money are directly proportional. But that doesn't mean that people can't and don't beat the market. They do.
 
salima
 
Reply Wed 21 Apr, 2010 07:06 pm
@fast,
i get the idea some people manipulate the market and get away with it, though...or i am falling for another conspiracy theory? i still think it was a bit suspect how it crashed like it did and began recovery on its own and a lot of people benefited from it.
 
 

 
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