'I've done all the dumb things' - Suggestions?

SilverDollar said:

I understand the concept of free trade but think its a rubbish one personally. Why

If you have $1 worth of stock and it raises to $1.20 why sell $1 worth...

My options would be..

(A) Sell the lot because you've realized the expected gains and the reason you brought are now fulfilled, or the reason for buying is no longer relevant.

(B) Keep them all as its got to $1.20 but your reason buying is still strong and you think its got some further growth up the sleeve.

If the stock went from $1 to $2 I would apply the above or (because of the massive gains) sell some to re-balance my portfolio.

Just my opinion.

This is my approach. Others have different ones.

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Its a vanilla explanation not a Blueprint of WHAT to do!!

There are countless applications.
One trader I know does this with pennies.
He sells his initial capital out when his trade exits leaving the profit,he leaves
the profit in there and only removes it if THAT drops 30%. Or there is an unusual massive gain. IE 50% or more in 1-3 days.
If other trades appear in the same stock he trades them and does the same.

In the end he has (8 yrs later) a constant stable of stocks. At any one time its between 10 and 30.

He has had some absolutely spectacular returns purely because he's been on stock that Fundamentally AND technically you wouldn't touch with a barge pole and they've just literally flown for no reason.

He erects fences for a living---cant watch a screen and doesn't want to.
Just before Xmas he paid cash for 2 blocks down South Of Adelaide and now building 4 town houses---2 pre sold.

Bet he didn't get the capital from erecting fences!

Just an idea.

tech/a said:

One trader I know does this with pennies.
He sells his initial capital out when his trade exits leaving the profit,he leaves
the profit in there and only removes it if THAT drops 30%. Or there is an unusual massive gain. IE 50% or more in 1-3 days.
If other trades appear in the same stock he trades them and does the same.

In the end he has (8 yrs later) a constant stable of stocks. At any one time its between 10 and 30.

He has had some absolutely spectacular returns purely because he's been on stock that Fundamentally AND technically you wouldn't touch with a barge pole and they've just literally flown for no reason.

Just an idea.

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Cant help thinking that I would be way ahead if I invested as above over the last 10 months...you wouldn't pay any CGT as well, on the initial capital in and out.....Its a sorta buy, hold, sell, and build plan...but with discipline.

tech/a said:

And as I keep saying.
Trading a plan which you have no idea wether its profitable or has the opportunity of being profitable is just as dumb as not trading with any plan at all.

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Yet another quote for my collection!!!

Chorlton said:

Yet another quote for my collection!!!

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And to add on top of Tech/A's quote, remember that in theory, those who trade discretionary (based on their intution alone) cannot confidently backtest their trading plan in a systematic way. Their methods for money management and position sizing may remain fairly consistent through out their trading career, but their criterias for entering and exiting will vary as market changes, or for whatever reasons that they feel the need to temporary or permanetly alter it.

The only valid way to the test the above is to paper test your trading plan until you've made enough sample trades that it will be profitable over the long term.

If you are trading mechanically, then it is as simple as coding in the strategy in large number of softwares out there and "properly" back test and optimise it.