How do YOU trade? (Discretionary, F/A)

[markrmau]

Just interested in how other people handle fundamental trades.

Basically, my method of trading is as follows:

1. Stock is suggested. Could be a broker report, could be on chat forum.

2. I do as much research as possible - potential market, directors competence, potential resources...(SP trend).

3. Now this is the CRUX of the matter. I make a decission. NOW. I buy the bloody thing or I sell the bloody thing. No dicking around trying to finesse an entry or exit.

I am extremely frustrated by my two brokers (different firms and accounts) who try to save a few hundred bucks by placing the order a little away from the market action.

What I find is that a 'natural selection' process occurs. Arguably, it is roughly 50/50 whether a stock will move up or down. You only buy (sell) the stocks that start going down (up) and so are selecting to buy the stocks that start going down or sell the stock that are start moving up.

I have recently missed out on 2 very good trades (>50%) because of this and am stuck with 4 trades that are doing nothing. :swear:

From now on, they will be using my method, and buying at market (assuming sufficient liquidity).

 

[professor_frink]

slightly off topic here markmau, but as a follower of charts and the like, how do you decide when to exit a losing fundamental investment?
When does the trade that is doing nothing(or going backwards) get sold so that you can look for a more profitable investment?

 

[Julia]

Just interested in how other people handle fundamental trades.

Basically, my method of trading is as follows:

1. Stock is suggested. Could be a broker report, could be on chat forum.

2. I do as much research as possible - potential market, directors competence, potential resources...(SP trend).

3. Now this is the CRUX of the matter. I make a decission. NOW. I buy the bloody thing or I sell the bloody thing. No dicking around trying to finesse an entry or exit.

I am extremely frustrated by my two brokers (different firms and accounts) who try to save a few hundred bucks by placing the order a little away from the market action.

What I find is that a 'natural selection' process occurs. Arguably, it is roughly 50/50 whether a stock will move up or down. You only buy (sell) the stocks that start going down (up) and so are selecting to buy the stocks that start going down or sell the stock that are start moving up.

I have recently missed out on 2 very good trades (>50%) because of this and am stuck with 4 trades that are doing nothing. :swear:

From now on, they will be using my method, and buying at market (assuming sufficient liquidity).

If you do your own order placement, via E-trade, Comsec etc., the choice is entirely up to you at the time. And, if you're currently using a full service broker, you'll save a heap in brokerage.

Julia

 

[Bobby]

With spec stocks you're in another world.
Be careful.

Bob.

 

[markrmau]

Hi All,

P_Frink - for me, a fundamental investment only is sold when the fundamentals change. After discussions with my broker, we sold SRL (B=$2.40,S=$4.25) about a month ago BEFORE copper got the wobbles. The brokerage firm felt that the metals market was over heated and that if a correction came about SRL would drop. Subsequently, SRL went to $4.60 and now is $3.70 or so. However, I still have TEN - sitting on about 15% loss. Overall, this broker has been very good.

Julia, the choice is still mine - just will be a bit more forceful from now on. Personally, I think saving $50-60 on brokerage is a false economy. It's information you pay for, and I aim to make several thousand on a trade. A few hundred doesn't really matter. However, I have heard of terrible brokers - to the point where a SmithBarney broker got a friend of mine to buy CRS, even though SB had a sell on it. Fortunately my friend bailed before too much damage was done.

Bobby, yes they are spec stocks, but that is why I use the smaller brokerage firms. They cover the smaller stocks and can spot some real gems before the bigger firms jump on them. eg TIM bought for about $2.25.

Cheers,
Mark.

 

[bullmarket]

Hi markrmau

re:

I am extremely frustrated by my two brokers (different firms and accounts) who try to save a few hundred bucks by placing the order a little away from the market action.

What I find is that a 'natural selection' process occurs. Arguably, it is roughly 50/50 whether a stock will move up or down. You only buy (sell) the stocks that start going down (up) and so are selecting to buy the stocks that start going down or sell the stock that are start moving up.

I have recently missed out on 2 very good trades (>50%) because of this and am stuck with 4 trades that are doing nothing.

From now on, they will be using my method, and buying at market (assuming sufficient liquidity).

When I was a client of JB Were (now Goldman Sachs or whatever) they were generally the other way round and encouraged me to place my orders a cent or 2 above the lowest offer if buying and vikky-verky if selling to ensure the order goes through - same as buying at market in reality.

I didn't mind as 1 or 2 cents either way made next to no difference percentage wise.

But I agree 100% with you in that your brokers should place orders the way you want and not how they want....after all, they are working for you

Imo, and I assume you already do this, but in case not, a must-do is to ask your broker to read back your order over the phone before you hang up.

cheers

bullmarket

 

[professor_frink]

Hi All,

P_Frink - for me, a fundamental investment only is sold when the fundamentals change. After discussions with my broker, we sold SRL (B=$2.40,S=$4.25) about a month ago BEFORE copper got the wobbles. The brokerage firm felt that the metals market was over heated and that if a correction came about SRL would drop. Subsequently, SRL went to $4.60 and now is $3.70 or so. However, I still have TEN - sitting on about 15% loss. Overall, this broker has been very good.

Ok thanks for that markrmau

 

[It's Snake Pliskin]

Mark,

Personally, I think saving $50-60 on brokerage is a false economy. It's information you pay for, and I aim to make several thousand on a trade. A few hundred doesn't really matter.

This is not the attitude to have. Trading costs make or break some.

Snake

 

[markrmau]

Trading costs make or break some. Snake

Just a difference of style of course, but if an extra $100/trade is the difference between profit and loss, I really think these other people should rethink their strategy. They may be over trading.

 

[Julia]

the choice is still mine - just will be a bit more forceful from now on. Personally, I think saving $50-60 on brokerage is a false economy. It's information you pay for, and I aim to make several thousand on a trade. A few hundred doesn't really matter.

That's fine as long as the information makes you profitable. My personal experience of using a full service broker some long while ago was that out of 12 recommendations, 3 were profitable after one year! Hardly justifies the enormous brokerage!

Good luck.

Julia

 

[bullmarket]

Hi Julia

That's fine as long as the information makes you profitable. My personal experience of using a full service broker some long while ago was that out of 12 recommendations, 3 were profitable after one year! Hardly justifies the enormous brokerage!

Good luck.

Julia

Yep - agree with you on this one (geeeeeeezzzzz, hell must have frozen over )

When I was still working I was a client of JB Were and over the years I was very happy with the advisers I had. I still keep in touch with one of them today

I always asked for a face to face meeting with each adviser I had so that firstly I could put a face to the name when I spoke to him on the phone in the future and secondly because it was much easier, for me at least, to make it known to my adviser what my objectives and risk tolerances were face to face.

Since retiring, I have much more time on my hands to do my own research and so I don't need a full service broker any more and so I'm with Comsec now.

cheers

bullmarket