When to fold 'em

[Sean K]

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.

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?

 

[nizar]

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!

 

[tech/a]

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!

 

[2020hindsight]

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

 

[2020hindsight]

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)