Important Trading Tips from an Important Trader

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I try not to make predictions and the market has a way of making a fool out of anyone who does. I don't think its a good idea to set targets. I'd prefer to hold the stock until it gives me a reason to sell. Trying to set targets will cause you to abandon stocks way too early. The hardest thing to do when you are in a position is to sit on your hands and do nothing, try taking partial profits on the way up or using the 9 dma as a stop.

I use the 9 dma as an indicator for stocks with hot momentum. Usually strong momentum stocks will close above their 9 dma. When the stock closes below that average, I will usually exit all or part of the position, depending on why I am in that position in the first place. For example, DOC pulled back to its 9 dma on 11/22/05 after breaking out and running to 6 and change. I used that as a point to buy more shares because the stock seemed to stabilize. Its not a perfect indicator but is a good gauge of momentum in my opinion.

Quote:
Originally Posted by chrisjacob
stockpicker:
today you had said that when you were building capitol in your early days, you focused on one-two trades. in that case, were you a buy and hold till goal.
or were you selling on peaks, and buying on slams, on strong or weak days?
thanks chris



comments welcome from any body else

It was purely buy and hold. And, I have to say, there was a lot of luck involved.

I had $20k to my name and my broker/friend liked quarterdeck when the internet was in its infancy (pre-1995). I literally put all of my money in it when the stock was trading for a buck and change and sold it for about $10. It ultimately went much higher and then, much lower and then into bankruptcy. I was lucky enough to do that again with another wireless stock. After that, I was hooked on trading and I had enough money to try it on a full-time basis. Given where I am at now, I would never put all of my eggs in one or two baskets. But, I don't like too much diversication in the number of my trading positions either. There are some traders who will carry 100 positions. I tend to trade up to 20-30 positions of different sizes.

I think the key for anyone involved in the market is to find the style that best suits your personality and your risk tolerance. I tend to trade much differently than sshguru does and I know neither of us could trade the same way the other one does even when we are in the same stocks. Also, if you can't sit in front of the computer all day, you can't buy dips or sell rallies or get as good a feel for the market as someone who does. I hope this helps.

I use very few tools. What I tend to do is own a small amount of the stock and follow the trading action. I like to watch the stock trade, whether it be for a daytrade or a longer term position. After a while, you can get a sense of whether the stock is being accumulated or sold and support and resistence levels. What I tend to do is wait for a stock to put in a new closing high on better than average volume after trading in a base for 4-6 weeks. That is a good signal to me that a stock may be ready to break out and make a good move. When you overlap that analsysis with strong fundamentals (like earnings and revenue growth) you can catch some big moves. It works on story stocks as well where the fundamentals may not be there yet; and I tend to trade those with a shorter time frame.