This is an educational website, focused on INVESTING with the purpose of 1) protecting our capital and 2) furthering our skill and yours in not just surviving but thriving in these ever difficult stock markets. We are NOT day traders or scalpers (although we do sometimes); we are investors who trade around core positions as dictated by the market, with a focus on IRA and 401k Investing, actively managed taxable accounts and high yield investment accounts. We take 80% of the profits in an uptrend and avoid 80% of the losses in a downtrend. It works. We'll show you how.
We structure our entries and exits so we do not start with a loss. We do not go red in a position to establish it. This is key. We do not hold a position that pulls back to a loss. We sell, using stop loss orders and outright sell orders in certain aggressive downtrends when support is threatened or broken. This is so in our active accounts AND in our IRAs. We do not take losses. Period. If you are easily offended, don't view the video. http://www.youtube.com/watch?v=-rOkTFfNSf8
May I present my Trading Rules:
#1: DontTakeLosses, buy the bounce after a dip and get out if goes lower. We do not go red just to establish a position. Set your stop, let it hit...so be it. Stop orders = humility, admit you were wrong, then try to do better.
#2: The price at which we buy is more important than the stock we own.
#3: We NEVER go to bed in debt. Period. Not even leveraged ETFs (ok, once in a while, and intraday margin rarely).
#4. Before BUYING, ALWAYS do/check EACH:
- study the weekly and daily Chart, identify in these charts the relative risk vs. reward, pick your entry, stop loss, and anticipate where yu might get stopped or exit
- compare a stock to its sector ETF, and the ETFs other similar stocks;
- only buy an uptrending stock (or severe breakdown);
- is your stock above its 50ema? and how far down to 200ema?
- is it near support? what is ths support? support = lower risk;
- where on the chart, at what price will selling pressure likely come?
- set 2 price and orders at once: buy price, your Stop Loss and at least plan/consider the possible sell/profit price; (I buy on market orders unless I'm stalking a gap fill, I set a stop loss order immediatley before I move on)
- remember: price= information, volume = reliability;
#5. NEVER add to losing position,
#6. Do ADD to winners on pullbacks.
#7. Move Stops up as price moves up, NEVER reset stops lower, I mean it.
#8. Be very careful holding over earnings (ok more often in IRA, less often or 1/2 in CASH account), wait to buy until 3-4 days after.
#9. Trade from strength. CASH. At your price or close to it, many entries won't be perfect, if you wait for that, you are frozen;
10. Ruthless with losers, patient with winners;
#11. Don’t fight: the Market = TRUTH, you are not smarter than the voting machine which sets the price. We follow Big $$, not lead them;
#12. Watch Index Futures for how cash market will gap @ open;
#13. Small and mid cap with PEGs less than 1 = Ka ching 4 your IRA;
#14. Invest in stocks you trade, ones that beat earnings, revenues and and raise guidance, the Trifecta.
#15. Big $$ will pay up for growth, watch OBV (On Balance Volume = accumulation)
#16. Gaps usually fill, not always same day. Track unfilled gaps. Watch daily chart and 15 minute chart for fills, = lower risk entry. $$.
#17. Watch Big $$, watch for rotations. Watch for head fakes too.
#18. Be nimble, always have a plan,for every day and an overall plan, be willing to change both.
#19. Look for volatility squeezes. ka ching. Let these run. VS can squeeze up or down, sometimes headfake too. Hang in there, this is where we make the most dinero. Best buys for IRA and CASH accounts.
#20. Gaps 2x ATR usually fill, 1x ATR may continue to run.
#21. Selling = insurance. When in doubt, sell. CASH = control.
#22. CASH does not go down in down market. Beats defensive stocks.
#23. Stay in sync, HFT ALGOs can run really hard up, harder/faster down.
#24. Stand aside when HFT algos take control. When selling gets momentum, it can be a trap door with no bottom, just chcck the charts on May 6, 2010... one of my BEST profit days in my CASH account ever. I was 100% CASH, bought the dip/bounce on a 998 point down day in Dow.
#25. Watch the overall market, 80% of stocks correlate to the direction of the Indexes.
#26: Try to keep your account balance near its highs. No Complacency. Its your money.
#27. Keep it simple. And again DON'T Take Losses. Just SELL.
These need not be your rules, but start writing a set of rules that work for you. And write a trading plan for each type of account that you have. I can help you with a half hour coaching lesson if you'd like. You may also just ask questions on the Member Stock Views page anytime. Happy investing.
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