# When to fold 'em



## nizar (26 November 2006)

Ok. So You buy a stock according to some entry criteria as it triggers the buy. You will exit either through a initial stop (at a loss) or through an exit (at a profit), both of which are predetermined before entering the trade.

So now your in. BUT - the share price doesnt move, or more accurately, it hardly moves. It just hovers around your entry price. What do you do then? How much time do you give it? Time to chop? Or no reason to chop?

Id be keen to hear some thoughts from you experienced traders.

Many thanks.


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## tech/a (26 November 2006)

nizar said:
			
		

> Ok. So You buy a stock according to some entry criteria as it triggers the buy. You will exit either through a initial stop (at a loss) or through an exit (at a profit), both of which are predetermined before entering the trade.
> 
> So now your in. BUT - the share price doesnt move, or more accurately, it hardly moves. It just hovers around your entry price. What do you do then? How much time do you give it? Time to chop? Or no reason to chop?
> 
> ...




Nizar.

It depends on your trading timeframe.

If you've bought it for a longterm position then youd hold until your exit or your stop is hit. Mind you you can have an in activity stop as well but that would be up to your trading methodology.

Short term and speaking for myself,I wont give it long at all. In fact Id be kicking myself that I had misread the momentum and be asking why I was in it in the first place. For me if its not moving NOW, its place is in my watchlist NOT as a held position.


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## constable (26 November 2006)

I dont pretend to be an experienced trader but as far as im concerned if its not going up its going down. I get edgy after about 10 minutes. If its not going up usually signifies an immediate lack of demand. This all has to be taken in context with recent trading patterns and available info affecting stock.


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## 2020hindsight (26 November 2006)

comment from the beginners pool again :-
1. "Stock market, he like the lift shaft of a 50 story building. You start at the ground floor and you have an objective of getting to the penthouse"... Confucius as a young man.  

2. "Lifts are like yoyos"...  Confucius after he'd made a few trades

3. "Some months the lifts were predictable, some months you press the up bottom and the bloody things go down - and whether up or down, it goes like a blurr"... Confucius getting second thoughts, one day richer, one day poorer 

6. "Some months the lift just sits there, but YET you believe in the back of your mind that by this time next year you'll be "way north" of your present floor"....Confucius after he decides that a guarantee of the penthouse on the 40th floor will be just as good as the more speculative one on the 50th.

Apart from the fact that Confucius was lousy at counting. .. I can't help thinking that stalwarts like BHP will surely be worth more in 12 months than they are now - but at moment there's more (correction , SEEMS to be more - imho)  to be made jumping between the escalators flying back and forwards than there is just sitting in an idle lift.  (PS could change tomorrow lol)

******************
Btw,  Here's 4 versions of the song "The Gambler".  You know the one where Kenny Rogers says this old bloke asks him for a swig of brandy, and a light - then gives this alleged "advice", then dies.

Now the first version poses an interesting theory.  The old gambler is portrayed as a bum.   And if his "trading philosophy" is so sound, then why is he penniless at his age  "bumming" whiskey and cigarettes.

Final comment - I like the muppet version - at least you get a laugh as you're going up and down the lifts all day   

 The gambler , Kenny Rogers:-
a. the spoof http://www.youtube.com/watch?v=47Gt8tLkRhk&mode=related&search=
b. muppets version http://www.youtube.com/watch?v=PIFMbqLwzp0&mode=related&search=
c. the stageshow version http://www.youtube.com/watch?v=zv_ItlNyEOM&mode=related&search=
d. how it REALLY happens - the cards are dealt, and some punter gets an ace, and the next gets a "deuce", lol ..http://www.youtube.com/watch?v=CgLcRoe8MH0&NR

Moral of the story.  The alleged advice in this song is about as helpful as the average Stock Report lol.
LOL - and the other interesting analogy with stock reports? - Kenny Rogers made a million with this "advice"


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## tech/a (26 November 2006)

constable said:
			
		

> I dont pretend to be an experienced trader but as far as im concerned if its not going up its going down. I get edgy after about 10 minutes. If its not going up usually signifies an immediate lack of demand. This all has to be taken in context with recent trading patterns and available info affecting stock.




There is much to be learnt from consolidation in *ALL* timeframes.

If its in consolidation and you've either got it on your watchlist OR your trading it dont take your eyes off it UNTIL it confirms that the break from that consolidation is opposite to your proposed trade/trade.


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## constable (26 November 2006)

point taken tech!    but i was speaking from a pure day trading mentality where i wouldnt hold a stock for more than a few hours to trade between ticks.


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## It's Snake Pliskin (26 November 2006)

nizar said:
			
		

> Ok. So You buy a stock according to some entry criteria as it triggers the buy. You will exit either through a initial stop (at a loss) or through an exit (at a profit), both of which are predetermined before entering the trade.
> 
> So now your in. BUT - the share price doesnt move, or more accurately, it hardly moves. It just hovers around your entry price. What do you do then? How much time do you give it? Time to chop? Or no reason to chop?
> 
> ...




There are no CORRECT answers here Nizar. However, time is the prime element of consideration. Time is the common element for all market participants  - though somewhat diversified.


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## tech/a (26 November 2006)

constable said:
			
		

> point taken tech!    but i was speaking from a pure day trading mentality where i wouldnt hold a stock for more than a few hours to trade between ticks.




On a similar page I think with regard to very short timeframes.


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## Bobby (26 November 2006)

Yes Tech that WMT chart is a great example of what happens.

I would have bought at .037 with stop at .035, in hindsite I could have made some good bucks.

What was your entry & stop ? please.

Cheers Bob.


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## MichaelD (26 November 2006)

It's Snake Pliskin said:
			
		

> There are no CORRECT answers here Nizar.



I agree with this. I don't yet know the answer for any given time frame, however the only way to find out if a time stop will be beneficial or harmful for a given trading plan is to run the plan without it for a large number of trades and then backtest a time stop against this dataset to see which comes out more profitable (which is all that matters in the long run).

Pronouncements one way or the other without solid data behind them are meaningless.


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## tech/a (26 November 2006)

Michael.

I certainly used to have your view.
That everything should be tested and results tabulated to a "blueprint" from which to work.
If there was one piece of advice I would give to a new comer it would be to learn how to trade long term profitably first before attempting to trade shorter timeframes.
Further I would certainly tell them to learn how to develop profitable trading methodologies through backtesting.

*BUT.*

Trading shorter term is a completely different ball game. Discretionary variables cannot be successfullly tested with the software I know of.
But I can without reservation tell you that my experience is that when trading short term you'll satisfy all those "Numbers" if you get on momentum and ride it as long as you can and then get off it!

Sitting in a stagnant stock not only means no profit till it moves *BUT ALSO * opportunity cost.

So I'll have to disagree with both you and Snake on this one.



> Pronouncements one way or the other without solid data behind them are meaningless.




*To you!*
They used to also be to me as well.
Not any more.


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## MichaelD (26 November 2006)

tech/a said:
			
		

> Trading shorter term is a completely different ball game. Discretionary variables cannot be successfullly tested with the software I know of.



I'm afraid I'll have to steadfastly disagree with this.

I agree on one point - that it is very hard or impossible to backtest or prospectively test discretionary strategies with software.

I vehemently disagree, however, that it is impossible to test these strategies. Indeed, I'd argue even more strongly that such testing is ESSENTIAL for shorter term strategies.

Right now, your strategy is extremely profitable. Fantastic! (No sarcasm or envy intended). But...is this because of skill or because of current market conditions? How will you know the difference? How will it perform in different market conditions?

You know these answers for long term trend following systems, and spent a long time working them out, so why all of a sudden do you not need to know these same answers for your short term system? It's ironic, don't you think, that 3 months ago we were on opposite sides of this argument. What changed?

I'm doing things a bit differently. I essentially have 3 short term plan methodologies, all of which attempt to achieve the same thing. The entry signals are the same. I'm keeping records of how all 3 trade going forwards (systems 2 and 3 have real money - system 1 has been superceded but I'm still tracking it). I can look back at market conditions and how all 3 systems traded these conditions. It's very, very time consuming and tedious, but the knowledge available from this data is well worth the effort, particularly in the ability to go back and try a new idea out on existing data. It also means it is going to be more and more obvious as time goes by when a system is no longer performing as expected.

Is it simply a different road to the same end point? Maybe.


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## It's Snake Pliskin (26 November 2006)

tech/a said:
			
		

> Michael.
> 
> I certainly used to have your view.
> That everything should be tested and results tabulated to a "blueprint" from which to work.
> ...




Nice post tech/A.

With what do you disagree? I have missed it. Straight over my head.


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## Bobby (26 November 2006)

tech/a said:
			
		

> So I'll have to disagree with both you and Snake on this one.
> 
> 
> 
> ...



Now why would you disagree with Shake ?
What did he say that you think wrong


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## It's Snake Pliskin (26 November 2006)

Bobby said:
			
		

> Now why would you disagree with Shake ?




Thanks Booby


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## nizar (26 November 2006)

It's Snake Pliskin said:
			
		

> Thanks Booby




hahahahahaha LOLOLOLOL   :


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## Bobby (26 November 2006)

It's Snake Pliskin said:
			
		

> Thanks Booby



Your most welcome,

Tech must have had *Blink thought* when saying that ?

He's big enough to say sorry when he got it wrong, just wait !

Bob.


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## chops_a_must (27 November 2006)

I have a tendency to only put money into shares which pay good dividends, EPS etc. So I'm not sure it really applies to me.


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## tech/a (27 November 2006)

Ill answer on snakes other thread.


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## tech/a (27 November 2006)

Bobby.

WMT was .059 buy and sold 10c the sell was placed when trading was at .092 as I saw it as a round numer resistance point---sometimes you get lucky.(Mind you I think we all MAKE our luck!).

I bought back in again at support of .85c.


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## Sean K (27 November 2006)

nizar said:
			
		

> Ok. So You buy a stock according to some entry criteria as it triggers the buy. You will exit either through a initial stop (at a loss) or through an exit (at a profit), both of which are predetermined before entering the trade.
> 
> So now your in. BUT - the share price doesnt move, or more accurately, it hardly moves. It just hovers around your entry price. What do you do then? How much time do you give it? Time to chop? Or no reason to chop?
> 
> ...



Depends on why I bought it. If it was because it was supposed to announce some result then I'd wait for that. If it did bring out the result expected, or not, then this would create another reason to alter plan depending on sp reaction. If it was on technical reasons, I'd wait for something to change in the price or volume to alter my decision. If it's on fundamentals and something changes in the market or to the company then I'd change my mind. 

So, what was your reason for buying the stock mate?


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## nizar (29 November 2006)

kennas said:
			
		

> Depends on why I bought it. If it was because it was supposed to announce some result then I'd wait for that. If it did bring out the result expected, or not, then this would create another reason to alter plan depending on sp reaction. If it was on technical reasons, I'd wait for something to change in the price or volume to alter my decision. If it's on fundamentals and something changes in the market or to the company then I'd change my mind.
> 
> So, what was your reason for buying the stock mate?




Technical reasons. Higher highs, higher lows, all time highs about to broken. Volume building. The stock in question was MLS.

I bought at 4.1c last wednesday anticipating a breakout and it stayed there with 0% movement for 3 days. I would expect either a breakout or consolidation between 3.7 and 4.1. But i guess doing nothing is like consolidation.

Thanks all for your responses.

Lesson for me is: I guess if all the entry criteria are still met, you just gotta give the stock some time to make the move. Let it consolidate for a bit. Fortunately for me, i only had to give MLS 3 days, then BOOOM!


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## tech/a (29 November 2006)

Nizar.

A little trick I use if there is one I think has great potential and I may miss it live for any number of reasons.

Buy a 1/2 parcel then the rest when/if it bolts.If it falls out of consolidation I sell immediately no questions and as I have a smaller parcel the loss isnt that great.

Consolidation comes in various timeframes the longer the timeframe the stronger the support/resistance from that consolidation zone.
As you have seen from some of the tick charts I post short term consolidation can be broken either way very easily.

You make a good point about your criteria being met.
In a breakout that is the breakout either way.---dont try to guess it---I'll bet that when you do you'll suffer from the 50/50/90 rule.

You'll have a 50% chance of getting it right (Presuming it does something) and you can bet that the way you pick will have a 90% chance of failure!

Ever turned into a road and you can go left or right to find the number your after---Well I get it wrong 90% of the bloody time!


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## 2020hindsight (2 December 2006)

tech/a said:
			
		

> Nizar.  A little trick I use if there is one I think has great potential and I may miss it live for any number of reasons. Buy a 1/2 parcel then the rest when/if it bolts.If it falls out of consolidation I sell immediately no questions and as I have a smaller parcel the loss isnt that great.




yep - at the moment I only have half my portfolio invested.  - rest is earning 7% in the bank. Then again - that's just being wimpish I guess. (dont want a repeat of May ) Anti ramping Disclaimer:- I trust everyone reading this who knows anything knows that I know nothing.  - and btw, I don't have shares in any banks. 

CHANGING TOPIC:-
On the question of "brave vs "stupid" - what about this guy. - who invests his life savings on one spin of the wheel.

http://www.unoriginal.co.uk/footage129_2.html

for a start he could have gone to the craps table where the casino advantage for a bet on the pass line is less than 1.5% - (or in Reno where you can put an "odds bet" of 10 times the pass line bet, the casino advantage comes down to about 0.15% I guess.  

Instead of that he opts for the roulette wheel , which in the States probably has a "0" AND a "00" - so casino advantage is probably about 5.2% (2 in 38). 
Gotta fall into the idiot category this one. 

PS either that or he's got a very nice godfather behind him - and is simply suckering in the bystanders -  "he used the money to set up a poker website" - ahh huh 

Personally I come from the school of hard knocks -  here's us getting swimming lessons when we were kids for instance:-
http://www.unoriginal.co.uk/footage29_1.html swimming training in darwin


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## 2020hindsight (2 December 2006)

I like that one that someone posted .. about testing your inner voice - like, "do i sell or hold? - I know , I'll toss a coin!!" - and then when it comes down heads you find in your heart you wanted it to come down tails  - so then you're arguably in a pickle - so why not treat the toss of the coin as a test to see what you REALLY want to do (sorry - seriously amateur contribution as usual)


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