Yesterday I ended up buying, in total 4975 shares of WCPS. 175 at 1.05, the rest at 1.08, these being in one block.
Today I sold the entire 4975 shares at 1.11 via a sell order I placed early this morning. Yes, it went "all or nothing".
I got about 2.7 percent profit, about 150 bucks. Not a lot, but quite enough to satisfy me.
I realize that later in the day the stock went wild and peaked at 1.27. But I am happy to have gotten what I did, and
had absolutely no way to predict that it would go crazy later in the day. I set a goal, got it, and am happy with it. Nothing more.
Speculating about what I COULD have gotten out of it if I'd sold at the peak is pointless. And I do not intend to pursue extreme risks.
I've said all along that I'm not greedy and I'm not going to hold out for ridiculous returns.
And with this brokerage I don't have the option to use a trailing stop anyway, or I would have. In this case any trailing stop I might have set would have resulted in a few more cents per share at most. The afternoon chart was all over the place and upon taking a good look
at it, for any trailing stop to be useful, I wouild have to have set it wide enough that I would have seriously put ANY profit at risk.
At one point it hit 1.25 and then gave up 6 cents within minutes, only to rebound to 1.27 shortly thereafter.
I also had to rely on a day order to sell anyway, as I had to attend to business in town and was not available to track the action
all day anyway.
I don't suppose it would kill me to ask for more than a 3 cent gain the next time I go into this stock, if I do that. And I probably will,
once it drops back down again.
Given that I got my asking price, I bought at or below my intended buy price, and I made a profit, and in just one day,
I would characterize this as a completely successful trade.
I've traded only twice with my larger account and it has grown by 7 percent in less than two weeks.
I can't say I'm unhappy with that.
Oh, my running success rate:
I have 15 round trip trades logged in my logbook. 12 of them were profitable.
Of the three that were unprofitable, only one of them lost more than 100 dollars. The other two lost me less than 30 dollars each.
Though I can't say this is enough data to predict my future performance, it does tend to indicate that my criteria for selecting
my trades seems to be quite workable.
To me it has to be pretty obvious that the stock is going to go up in the near term or I won't buy into it. This is why futures and options really don't seem like they're for me.
There have been days when I could trade, and didn't, simply because I didn't see any opportunities that looked strong enough for me.
My cumulative earnings so far have been 5.5 percent in my smaller trading account, and 7 percent in the larger one.
Another thing that I have to consider for the future is that as the value of my funds (hopefully) grows, I'll have to focus on more heavily traded stocks where it isn't difficult to move large blocks of stock at once, as I've already encountered that problem one time even at this small scale I'm trading at now. I didn't get that 4800 share block right away. It just wasn't there due to low volume trading in the morning, but as the day picked up eventually that order was filled. However it was easy to sell 4750 shares the next day when volume picked up as prices started to rise.
And that is what will pose a challenge to me. (Among other things...) The more heavily traded stocks will likely be less volatile in their daily price action. While WCPS is proven to frequently give five, even 10 percent or more in daily action, based on recent history, I can't expect to find something comparable to that that trades in much larger volumes on an average day.
I guess I'll have some time to figure out my picking strategies for when I start scaling up my trades.
Last edited by Carrerain4; August 28th, 2014 at 07:24 PM.
I had to be a little flexible, and I was. There was some price chasing going on but I set a max entry price for the stock at 1.10 but tried for 1.05 with the initial order. I got 175 shares for that but had to bump up to 1.08 to get the rest.
I got it within my set criteria. Pass.
Limited price chasing within established limits is acceptable to me. I simply can't be chasing prices WITHOUT
a defined maximum I wish to pay already firmly in mind.
My goal was to get 3 cents per share if I got my buy-in at a max of 1.10 per share. I believed that it could move to 1.13 in the day, and obviously it easily beat that number.
I got my desired gain. Pass.
I made a profit. Pass.
Due to the way my brokerage is structured, I can either have a stop loss OR a sell order in place, but NOT both at once.
Since I had to get away from the house, I placed a sell order based off of my buy price. I could have set a stop loss,
but my choice was to go for the profit rather than guarantee the loss.
I realize there is always a risk involved with not having an active stop loss, but I had to make a choice and accept the
risks that come with it.
Switching to Tradeking will likely help me to be able to both have a stop loss in place as well as a limit order to sell out at if the price goes my way.
But I don't have that feature available to me now so there's no point in worrying about it.
Thanks for keeping up with the journal, I pop in and read it on occasion.
Keep in mind trading isn't so much about the outcome, rather about the process. Not using a stop loss is a bad process for most. (Not utilizing a stop loss is o.k. if you're sitting right there at your computer, ready to eliminate the trade if your hypothesis is invalidated, but making a habit of not utilizing a stop loss and then leaving your station will eventually burn you, imo).
You're essentially playing Russian roulette. Just because you won the game once doesn't mean you made an intelligent decision in regards to your safety. "I made a profit...pass" is analogous to "I'm not dead...pass...". It'd be even less intelligent to continue playing the game.
Last edited by zander931; August 29th, 2014 at 12:17 PM.
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You will learn eventually that some of the best trades may not end in a profit and some of the worst trades can be big winners.
When a trader has limited capital they tend to focus on the money. Instead focus on the process and learning how to trade the best, learn how to cut losers quick, how to manage your risk, and learn when to press the gas. I am not advocating one method over another as there are multiple methods and ways to make money in the market. But trading is a game of keeping what you make.
You also have to keep an open mind and understand that you can be wrong and still make money and be right and lose. Some analysts have the right ideas, but they cannot trade their ideas. Some traders have wrong ideas but make lots of money.
Nothing in the market or trading is black and white, everything is a foaming sea of gray.
As I learn more, I have come to an understanding that I know very little, but I have been able to determine that there are small windows where I have an edge and my job is to operate during those windows. And to not when the window is closed. Yesterday was a prime example, I took some trades out of boredom. The only thing that saved me was cutting losers quick and realizing I had no edge at that moment.
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@Carrerain4, congrats on making money. The question is not so much about whether to use a stop or not, it's more about, "what's the worst that could happen?"
Risk control is the hardest thing to do, but the most essential. There are several ways to do it: (1) hedge with something else, (2) buy premium, (3) use a stop, or (4) accept the risk of losing everything. There are times when each is appropriate. For #4, with a $1 stock, 5000 shares, you are literally risking $5000, even if it's the tiniest chance. If you're short calls in a biotech and it finds a cure for cancer, you will lose everything in your account, maybe more. As long as you truly understand that this CAN happen, and are okay with this, then you deem it worth the risk due to there being such a minuscule probability.
I am going home long today, hedge partially in some things, completely in others, and none in others. If I have to reduce my risk to the point that I can't make money except in an outsized move, I might as well not put the trade on. Sometimes we become so focused on not losing money that we don't take enough risk to actually make money. But limiting the risk is necessary in the event of a worst case scenario, either that or be completely ok with actually losing an undefined amount, which could in some cases be everything. However, a poor way to use a stop is to just put it in and hope it doesn't get hit. Doing that is not really an effective strategy. Best of luck and a good weekend to you.
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My current opinion on the usage of a stop loss is that you need to consider the overall stability of both the stock and the stability and condition of the company. I would consider the chance of incurring a catastrophic value loss in the stock
of a company that is healthy to be a low probability event on the order of being struck by lightning or winning the lottery.
I believe that a worst LIKELY scenario would mean I'd have to be invested for days or weeks in order to reach the break even point.
Don't take this as negative criticism, but: it will be a helpful and therapeutic experience for you when you have your first big loss, which, no matter how good you are, you eventually will.
You will have one whether you have picked a good company or bad, whether you were right about the company or not, whether you were right on the market or not. It just comes. It comes to everyone.
And then you will understand a little better what the actual risks are. The worst likely scenario is that you will never get your loss back and will have to write it off and move on. And that's a very good learning experience.
You will also have a different belief about loss and risk control. That just comes, too.
I do wish you luck and good trading, and I hope that your learning experiences don't take as long to sink in as mine did....
Good luck, and have a good weekend.
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I accept all risks that come with trading. I accept the fact that there are factors that are beyond my control and that
no mitigating factors short of total withdrawal from the market will stop.
I accept the fact that there is a learning curve and it will probably never end.
I accept the HIGH probability that the day will come when I realize "I really should NOT have bought that!".
I attempt to control the factors that (a) I can control and (b) understand.
I accept the fact that my trading methodology at this point carries high risks with it due to the fact that I am usually
performing single trades that utilize ALL of my available trading funds. This is (by my personal criteria, not necessarily yours) a calculated and necessary risk. Until such a time comes as the costs of trading (fees and commissions) become a very minor factor in my profit-taking objectives, I have to do it this way OR will have to reduce my exposure AND, unquestionably, reduce my profitability potential as well, which reduces rate of growth.
I am here to take acceptable risks. If I don't want to take on risks, I would not be trading.
The day will come when I can (and will) be able to not risk all of my available funds on a single security. But due to
the small overall value of my trading accounts at this time, that day has not yet come. Limiting my trades to
not put my whole fund at risk at once means that I'll lose profit due to excessive fees. I am not willing to do that.
I am here to take acceptable risks. If I don't want to take on risks, I would not be trading.
All this is subject to change. I'm still new at this and am learning. I think I've been very fortunate that at this exact
point, 13 of the (now 16) trades I've booked have been profitable. (Yes, I made money again today, this time with
another trip into IAG. I got another modest profit, nothing to write home about, but still it was a pre-planned trade that was executed at the exact buy and sell values I laid out (actually wrote them down before trading) and so it would qualify as a successful trade by any definition.
I now understand picking your entry and exit points. I'm doing it. And every time I've done it so far, it has worked
as intended, with the only variable factor being how long it took to achieve the intended results.
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