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| txtrapper 548 posts msg #33905 - Ignore txtrapper |
11/13/2004 8:05:15 AM TxTrapper's 10% - 10% Rule Money Management I can't stress enough to preserve your capital so you can live to trade another day. This is one of the most important rules in trading. I've put it down in black and white in an example below so you can see for yourself how important this rule is. Please take this into consideration when trading; it will save you every time. I want to show you the importance of controlling your trades. By this I mean letting your winners run and cutting your losses immediately. In the following example, you'll see how I can lose 4 out of 5 trades and still make money. I'll use HEC as an example of our 1 winning trade. I bought that stock at .52. It proceeded up to .98 before coming back down. If I had sold at .98 I would have made 88% but I know we can't always sell at the high so I'll use a 50% profit in my example just to be more realistic. I'll also use round numbers just to make it easier to see. $10,000 cash position to start Make 5 trades with $2,000 (10%) in each Buy $2,000 HEC at .50 = 4,000 shares, Sell at .75 = $3,000 for 50% gain Buy $2,000 XYZ at .50 = 4,000 shares, Sell at .45 = $1,800 for 10% loss Buy $2,000 YXZ at .50 = 4,000 shares, Sell at .45 = $1,800 for 10% loss Buy $2,000 ZXY at .50 = 4,000 shares, Sell at .45 = $1,800 for 10% loss Buy $2,000 YZX at .50 = 4,000 shares, Sell at .45 = $1,800 for 10% loss You've just lost 4 out of 5 trades but your bottom line is still 2% ahead. Your balance is now $10,200, with commissions you'll probably break even. I'm showing you this example so you can see, even if you are only right 20% of the time, you won't lose your money if you maintain discipline and follow the 10% / 10% rules. That is of course, no more than 10% in any one position and no more than 10% loss on a bad trade. The 2nd rule is always the hardest and even I sometimes still fail on this one. But there is absolutely no excuse to fail on the first rule. The fastest way to the poor house is putting all your eggs in one basket and having the trade go bad on you. This will end your quest for financial freedom faster than you can say "oh no, what did I just do with my hard earned money?" The above example is very conservative because we have had many stocks that have made way above the 50% figures used and not so many losing trades of 10% or more. We will be right more than we are wrong and I'm sure we can get 6 out of 10 trades right or even as much as 7 out of 10 for a 70% win/lose ratio. In the above example, remember, we only have to be right 2 out of every 10 trades. So if you think you can follow the disciplines and be right more then 20% of the time, how can you not make money in this market? It works for any priced stock. You can start with 50K and buy 100 shares of a $100.00 stock. Be right once and have the one winner go up to $150.00 a share and you could sell the other 4 for $90.00, 10% loss and still come out ahead. No matter what price you pay, just stick to the rule. This is a big reason why my Trade Record is up 118% in 5 months. I follow the rules for the most part. I trade my money as if it was yours and I do not want you to lose your money. Please follow these simple rules and you will be around trading and making money for a long, long time. One other favor I would like you to do is, print this commentary out and put it somewhere near your computer. Look at it when your trade falls below the 10% loss rule. Maybe it will help you remember that if you stick to the rule, you will make money. In short, 1. No more then 10% of your capital in any one position, and 2. Cut your losers to no more then 10% loss. TxTrapper Join today; http://finance.groups.yahoo.com/group/bottomlinestocks/ "I can't change the direction of the wind, but I can adjust my sails to always reach my destination." ------------------ |
| TheRumpledOne 6,411 posts msg #33918 - Ignore TheRumpledOne |
11/13/2004 10:03:31 PM Coincidence? http://www.optionetics.com/articles/article_full.asp?idNo=8558 MARKET INSIGHT: Money Management By Jody Osborne, Optionetics.com 6/19/2003 7:30:00 AM We can find a lot of information about trading in books and on the Web, but most of it details how to pick stocks and what strategies that are available using options. However, one very important aspect of trading is often overlooked and this is money management. I often get the question, “Why did such and such stock move against us when everything was pointing at a good trade?” Trading is not an exact science; if it were, there would not be a market because everyone would know how to win. In sports, a team can often play a great game and still lose. The same thing can occur in trading. We can have all the odds in our favor, yet the stock will move against us. Despite the fact that many trades will lose money, if we manage our trades appropriately, we can still make nice profits. In fact, we can make money trading even if our winning percentage is below 50 percent. In just a moment, I am going to discuss how this is possible. However, before we go into some money management techniques, we need to realize that we are going to have losing trades. Even the best baseball team doesn’t win every game. In fact, a 60 percent winning percentage is considered great in the sport. This is similar to the options game, where a person who wins 60 percent of their trades should come out well ahead of the game. Too many traders enter a trade without any idea of when they will get out. Not only should we have a profit exit set, but we should also have a loss target set. With some strategies, we might be willing to risk the entire capital used, while others we might have a mental stop loss in place. Regardless of where your targets reside, it is important to have them ahead of entering the trade. This is because emotion will dominate our trading decisions if we don’t have an idea of what to do ahead of time. Now, just to show that we don’t have to be right every trade, let’s take a look at a table showing the profits made using various winning percentages. There is an old saying that states “Let your profits run and cut your losses short.” It is this basis that gives us the following table. Winning % Ave Win Tot Win Ave Loss Tot Loss # of Trades Profit 40% $500 $4,000 $250 $3,000 20 $1,000 50% $500 $5,000 $250 $2,500 20 $2,500 60% $500 $6,000 $250 $2,000 20 $4,000 Table 1: Profits Using Various Winning Percentages Notice that by having a 2-to-1 win to loss ratio, we would have profits even if we only win 40 percent of the time. It is also important that we allocate an equal amount of capital to each trade. Many traders will put large amounts of money into trades they think are the best. However, if this trade doesn’t pan out, it can erase the gains made from other trades. There are various strategies to manage your trading account, but the key is to have a plan. The idea is to “plan your trade and trade your plan.” This means knowing ahead of time where our exits lay and keeping a good record of the trades we have made in the past. Though we can’t win every time, we can learn to manage our money better so that the losses aren’t a problem for the long-term performance of our trading account. Jody Osborne Senior Writer & Options Strategist Optionetics.com ~ Your Options Education Site Visit Jody's Forum |
| hacktheripper 8 posts msg #33929 - Ignore hacktheripper |
11/14/2004 4:33:57 PM http://www.investorshub.com/boards/board.asp?board_id=3045 |
| txtrapper 548 posts msg #34049 - Ignore txtrapper |
11/22/2004 9:43:37 AM When to buy and when to sell ? How do you determine what price to pay (buy-side) or get (sell-side) for a particular stock ? Many traders do not understand the meaning and use of price support and resistance, or trendline support and resistance. They can very well be the traders best friend. Trading on the use of these key price areas when they hold and when breakouts occur can be the most rewarding of all trading strategies. All to often traders fall into the pit trap of buying on the dip, you know a stock price pulls back, greed then comes into play and traders buy because they think the stock price will quickly return to previous levels and beyond. Don't get me wrong many times buying the dip will get some positive results, but to do it blindly can often create financial loss. Remember as the saying goes " stocks go down for a reason ". Buying stock because the price has pulled back and now seemingly cheap from what it was, can be a very quick way a trader can lose their capital. You see if the stock price is falling in price and keeps dropping what has really happened is because of some sort of negative news, the stock share probably broke key support levels and is now spiraling downward.(this can be a bottom fishers worst nitemare.) the same holds true on the upside. A stock share price keeps moving higher and higher, so shorts want to move in thinking the stock will pullback. But in this case the stock may have broke through key resistance levels, in which case a pullback would be minimal, and a very dangerous situation for the short. When a breakout occurs the old support/ resistance now become the opposite of what they were, an important point to remember.... So before buying on the dip, or going short on the high....look first to see if the the most current trendline/ or key support/ resistance has been broken.... and don't forgetb those Moving averages particularly the 50 and 200 are they support or resistance. TxTrapper http://finance.groups.yahoo.com/group/bottomlinestocks/ (A friendly group - join today - daily stock picking contest) |
| txtrapper 548 posts msg #34370 - Ignore txtrapper |
12/15/2004 4:40:18 AM From: "mitmon" <mitmon@xxxxxx.xxx> Date: Tue Dec 14, 2004 6:57 pm Subject: Our Board Kicks Bootie I was just reviewing the stock picks for our group the past couple of days and WOW....there is no doubt in my mind that our group is better with their daily picks then any group on the internet,,, MadDog Join Today! http://finance.groups.yahoo.com/group/bottomlinestocks/ |
| txtrapper 548 posts msg #34403 - Ignore txtrapper |
12/17/2004 8:10:22 AM Calculated Risk! USXP is a company I have looked at before. They have some interesting things going on. Universal Express, Inc. owns and operates several subsidiaries including Universal Express Capital Corp., (including its USXP Cash Express division) Universal Express Logistics, Inc. (including Virtual Bellhop, LLC and Luggage Express), and the UniversalPost Network. These subsidiaries and divisions provide the private postal industry and consumers with value-added services and products, logistical services, equipment leasing, and cost-effective delivery of goods worldwide. Here is a very neat idea concerning DVD's. USXP announced that its subsidiary UniversalPost has formed an exclusive partnership within the postal store industry with The Convex Group to distribute Flexplay limited-play DVDs in UniversalPost's member stores. Flexplay is a patented technology that renders DVDs unreadable 48 hours after being removed from a specially sealed package. Once the package is opened, the movie can be watched an unlimited number of times within the 48 hour window. The disposable nature of Flexplay, which is recyclable, creates a viable alternative to traditional rental models, with no returns or late fees. This is a pretty good gamble I believe. But it does have a risk of 5...But I love the price. .. Symbol Position Entry Target Stop Loss Risk Rating USXP LONG $0.01-0.014 $0.024 - 5+ TxTrapper -------------------- come join us @ http://finance.groups.yahoo.com/group/bottomlinestocks/ |
| txtrapper 548 posts msg #34559 - Ignore txtrapper |
12/28/2004 5:28:04 AM PARS - Pharmos Corp (NASDAQ) I love these type entries, it was downgraded on 12/21 and as I always say "good news" last's one day and "bad news" last three days so it may pop soon. One thing is for sure, it's not going to stay down long. http://tinyurl.com/5o39o/ Long shot projection; BPTR (OTCBB) http://tinyurl.com/5dwxf/ I am going to stick with a relatively conservative upside price target of $1.50 for the near term, but the company is worth a lot more. TxTrapper --------------- Join the winners; http://finance.groups.yahoo.com/group/bottomlinestocks/message/4809 |
| txtrapper 548 posts msg #34601 - Ignore txtrapper |
12/30/2004 9:15:24 AM Play these using the "dead cat bounce" stradegy, anything that falls this much this fast will have a little pop, don't stay in too long take 3%-5% and get out quickly; dead cat bounce (ded kat BOWNS) n. A temporary recovery from a major drop in a stock's price. Also: dead-cat bounce. ------------------- 1 BEBE NM 2,101 28.3900 7:50:19.4 20 -12.8400 -31.14 2 TORC NM 3,922 1.2100 8:32:52.0 17 -0.3800 -23.90 3 CTRP 200 40.0200 8:04:49.0 22 -8.6800 -17.82 4 HLR NY 2,800 16.0600 8:36:36.6 12 -2.2500 -12.29 5 ESST NM 10,300 6.9000 8:48:31.2 42 -0.8500 -10.97 6 HITK NM 1,600 17.5000 8:48:42.5 6 -1.5500 -8.14 7 PMU AM 50,000 0.5500 8:24:17.9 16 -0.0400 -6.78 8 AMR NY 100 10.1400 7:56:01.5 22 -0.6700 -6.20 9 BJS NY 200 45.0200 8:46:34.3 40 -2.0000 -4.25 10 DWA 120 35.0000 8:12:12.0 8 -1.2200 -3.37 11 XNVA NM 500 1.2700 8:38:26.5 35 -0.0400 -3.05 12 KRB NY 600 27.3100 8:00:00.3 8 -0.8400 -2.98 13 CRIS NM 1,700 5.3000 8:12:10.9 28 -0.1600 -2.93 14 CBIZ NM 51 4.2100 8:06:40.8 6 -0.1250 -2.88 15 ZRAN NM 2 11.7700 8:16:17.6 38 -0.3400 -2.81 16 STTS NM 435 6.0400 8:51:26.8 6 -0.1600 -2.58 17 LFC 100 26.9200 8:01:37.2 6 -0.6800 -2.46 18 AUO NY 1,100 14.0300 8:30:53.3 17 -0.3500 -2.43 19 KAI AM 31 20.0000 8:32:07.6 0 -0.4300 -2.10 20 IDSA SC 400 8.2000 8:33:27.1 22 -0.1500 -1.80 TxTrapper ---------------- Join a winning team; http://finance.groups.yahoo.com/group/bottomlinestocks/ |
| rsarno 103 posts msg #34614 - Ignore rsarno |
12/30/2004 8:12:21 PM thanks one of your picks this morning really took off! I wish i had bought it heh still trying to decipher what posts to your group are legit, and which ones are pumps, and which posters are better at picks than others. thanks again, good group to be in. |
| txtrapper 548 posts msg #34624 - Ignore txtrapper |
12/31/2004 5:42:36 AM WEINSTEIN SCAN Done somewhat in the manner from Stan Weinstein's excellent book "How to Profit in Bull and Bear Markets". It is written to only look at stocks of $3 or more but you can change that. . . . Relative Strength Indicator (RSI) higher than that from 5 days ago. . . . Closing price is higher than the average in the past 30 days. . . . Volume at least 120% of that from the last 2 months. (The 120% is arbitrary. I used it because it seems to work) . . . Average volume for the last 2 months at least 100,000 shares (note that TC/2000 reports shares in hundreds). . . . Price today higher than 30 day average . . . Price today higher than in the last 3 weeks TxTrapper --------------------- |
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