When to fold 'em

[nizar]

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.

 

[tech/a]

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.

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.

 

[constable]

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.

 

[2020hindsight]

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"

 

[tech/a]

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.

 

[constable]

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.

 

[It's Snake Pliskin]

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.

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.

 

[tech/a]

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.

 

[Bobby]

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.

 

[MichaelD]

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.

 

[tech/a]

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.

 

[MichaelD]

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.

 

[It's Snake Pliskin]

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.



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

Nice post tech/A.

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

 

[Bobby]

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

 

[It's Snake Pliskin]

Now why would you disagree with Shake ?

Thanks Booby

 

[nizar]

Thanks Booby

hahahahahaha LOLOLOLOL :

 

[Bobby]

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.

 

[chops_a_must]

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.

 

[tech/a]

Ill answer on snakes other thread.

 

[tech/a]

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.