da-net
55 posts
msg #37381
- Ignore da-net |
8/9/2005 4:31:05 PM
Sometimes, price and technicals do not tell the whole story and one has to recognize when those times are at hand. Several years ago I was attempting to front run the specialist on the NYSE. While doing this I picked up 3000 shares of Alamosa Holdings @ $0.46, it was delisted the next day to the BB. I decided to look at the fundamentals closely and found this company had problems but its good points were not priced into the stock in my opinion. I held this stock until last year when I sold it for a nice profit for such a long hold.
Today, I found another stock that I know the fundamentals are NOT priced into the current price. In all fairness of disclosure I do own stock in it that I purchased just before the market closed @ $0.675. As the stock starts gaining in price, I will press my trade. I am pasting the info I recieved from a friend that had me go take a look. I do not know if the stock will achieve his price short term, but at some point its fundamentals will be priced into the stock appropriately. Please make your own decision if everything is priced into the price all the time!
China Expert Technology (CXTI:OTCBB) $0.72 + $0.12 on 428,500 shares. The stock
has bounced nicely off of a low of $.50 last week. The company earned $0.119 for
Q1 2005 and should be out with earnings for Q2 2005 in the next 5-10 days. I am
hearing that the earnings will beat Q1 and possibly buy a lot. At this rate the
stock will be trading with a P/E of 1-2. There has been sellers in the past,
most likely restricted stock from 1-2 years ago. If that selling is over, we
should see higher prices. The company needs addition newsletter writers or a
brokerage firm to get behind the company. If the earnings continue to grow, that
should happen. The stock is trading above the 50 Day Moving Average at $0.62.
There should be little resistance to the 200 Day Moving Average of $0.93.
Trading above $1.00 could see $1.20-1.30.
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carolynandjoel
30 posts
msg #37423
- Ignore carolynandjoel |
8/11/2005 5:43:37 PM
Dear Amserve,
I believe that you have described yourself as a trend trader. I have what may seem to be a silly question but it exemplifies the type of detail that always causes me problems. Since you are not a daytrader, but rather a trend trader, what time of the day do you check the conditions of your positions and make decisions about whether to sell, hold or buy?
For example, I held a refinery stock until this morning. I knew that yesterday was a big up day. Also, I saw that according to the new version of Fidelity's Active Trader Pro software, that a red pivot point had been made. I decided to sell and capture the profit I had rather than take a chance on losing it. However, when I returned home, it (as well as the overall market) had risen again.
Now, if I had waited until this evening, when I returned, I would be up more. So, how do you decide when to check the status of your positions? Thank you, Carolyn
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AMSERVE
9 posts
msg #37437
- Ignore AMSERVE |
8/12/2005 11:23:17 AM
Carolyn,
I'd more accurately describe myself as a swing trader. In my thinking, a swing trader looks to take advantage of shorter term, up to as long as six weeks, price fluctuations. A trend trader has a longer term outlook.
Many stocks have their ups and downs at somewhat regular intervals, sort of like breathing in and out. A good swing trader looks for entry points to profit from these swings.
For example, look at a chart of MU. In the last 4 months you can see the opportunity for as many as 4 swing trades - 2 longs and 2 shorts - simply by looking at the MACD. Trend traders might still be in their original position.
To comment on your message I would first like to say congratulations! You booked a profitable trade! More importantly, you stuck with your trading discipline by selling when your indicators told you to. Don't feel sorry about leaving something on the table for the next guy. I would also temper this by saying that you shouldn't blindly follow any so-called "trading system". Remember, THEY ALL WORK - EXCEPT WHEN THEY DON'T!
Personally, at the time I put on a trade I set my sell and stop prices. These will be based on support and resistance points from the last move. Most of the time this works out to about a 3:1 risk/reward ratio. I look to make 7 1/2% while keeping my risk down to about 2 1/2%. By having my sell stops in place (both up and down) I don't have to stay glued to the monitor. I check prices a few times a day and run my scans in the evening. I also consider where I am in the trading day/week. If it's close to the end of the day or week and I'm just a few cents away, I will close out a position.
I also have found that over the years my best trades are profitable from day 1. If I'm in a position that hasn't moved up enough for me to raise my trailing stop by the end of the second day I will re-evaluate it and, more likely than not, I will close it out.
There is another option you could have used with the trade you described. Classic swing trade theory says that when a profit target is reached you sell only half of your position and raise the stop on your remaining shares up to the point where at worst you will break even if the stock turns around. This keeps you in the game if the stock continues up. As the price continues to rise, simply raise your trailing stop price. Check out a six-month chart of GLW and see where you might have used this strategy.
This all falls into the category of trade management. Until Fidelity starts offering 100% accuracy guarantees, how you manage the trade will determine how successful you become. Again, congratulations!
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