Here is my counsel. Find a more reliable car. Two years ago I had a gt2 engine blow up ( shaft ) with only 30,000 miles. -Little princess cost me over $11,000 in repairs. ( and that low price was because i paid the mechanic in cash. Not joking )
I keep reading your post above for the worst case scenario, i.e., how much you will lose if it does NOT work. All I can find though, is how much you will make if it does work. You have your orders to take profit, you are optimistic, you feel great about it, you know how much you will make if it works -- all good.
But the most important thing is, what if it does not work out in your favor? What if they dump the shit out of it and it opens Monday at $15? Or if it goes sideways for a week and does a slow grind of death down to low teens? In other words, where do you bail if the orcas at seaworld grow legs and walk out of their tanks and start killing people? I'm being facetious but you should, even as an investor and not a trader, have a point at which you say, "I don't like this stock any more, there are better opportunities to put my money elsewhere, I'll cut my loss, and move on."
Let me give a couple of examples, both pretty embarrassing:
- Back in early July I purchased GRPN at around 6.50. I liked the way it looked and was playing for a move to $10 in the next couple of months. Well, it just acted like shit, and I did not like it. Before earnings I puked it at around $6.30. I did not like the loss but it was only 20 cents. Well, I felt like a real asshole when they bought it up prior to earnings up to $7. I would have taken some profit there before they reported, but I was out of the move. Then of course it tanked and has been sitting south of $6 for a while. My exit was not good, but I had an exit, and I got out.
- FSLR ... I bought $63s and held into earnings and did not like how it behaved and got out just above $60. Well the next day they bought it up and now it's sitting just under $70. Earnings sucked, stock did not do what I wanted it to do, so I missed a $10 move. Maybe the worst exit I could have possibly made. I still wish I were in the stock.
On the positive side:
- I bought LNKD at $155s and held through earnings, and now it's trading $220. I did not want it below $150 and fortunately it did not trade there.
- I bought TSLA in the $217s and enjoyed a $50 profit. I was willing to let it go down to low 200s (was going to add $210s) but was going to exit there.
The common theme through these is that I had an exit strategy. My exits sucked for FSLR and was not great for GRPN, but I had to have a plan. I also had profit targets as mentioned above, and LNKD and TSLA have done better than I hoped they would. But I was prepared to dump TSLA if it traded below $205, and LNKD if it traded below $150. You have to have a "get out" point, because stocks WILL keep going against you at some point, and if that happens, it can wipe out months of profit in one trade. When you fail to plan for the worst case scenario, you open yourself up to catastrophe.
You could use options if a strict price-based exit is not how you want to approach it. SEAS sep 17.50 puts are $0.70 and the 15s are $0.20. I usually have a price/behavior based exit for trades like this and so I tend to not buy premium but it's one option. If indeed you are willing to hold for a month, then you could get 2 of the 17.50s and 2 15s for about $200 and be fully covered. Or some combination to partially hedge.
Last bit of unsolicited opinion: it is all good buying a stock that is "on sale." However, very often these fire sale buys take so long to play out that your money would best be deployed on something which is actually going higher. I'm not suggesting "buying high" ... often you can often combine a "buy on sale" approach with a stock that is generally trending higher, or has made a turn off lows. See LNKD as mentioned earlier for a great example of that. It was absolute shit for about 8 months, and then made what I thought was a good turn. It got slammed in early July and I bought there. It had already made the turn, and I had a good price to lean on ($150) if indeed I was wrong. That is very different than buying a stock that has been recently slammed to all-time lows and looking for a recovery. The issue with buying SEAS here is that you have nowhere to lean... how low is "too low"? Said another way, it's difficult to think this way, but a stock like GILD, FSLR, TSLA, all have a higher likelihood (in my opinion) of going higher than SEAS. Of note is that SEAS short float is less than 4%. Not enough shorts to screw IMO. Compare with TSLA which is 25% shorted and at all-time highs. Which is more likely to go higher? Buy high, sell higher is often a better approach than buying low, because a bottom has not yet been established. That being said, I sincerely hope SEAS works out for you and will be rooting for (but not buying) the stock.
Last edited by josh; August 16th, 2014 at 03:06 PM.
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Now, as for that "hot tip", just to be totally honest about it, I received the email alert for CJTF at 9:31 AM, only a minute after the market opened.
At that time its price was 0.0140.
At 10:07 it had dipped to 0.0100.
At 3 PM it was up to 0.0125, up 25 percent from its bottom.
I must have been thinking of another chart when I said it made 100 percent. Most probably that happened.
It's not the sort of stock I'd get into anyway. While I'm not opposed to the idea of buying certain stocks that
may trade at or below a dollar a share, I have no interest in stocks that trade in fractions of a cent per share.
Junk is junk and there's a reason for it.
As for possible losses, I am always aware that 100 percent of my money in play is at risk of disappearing.
Yes, 100 percent. ALL of it. Any given company might go belly up right now for any reason. It could get
sued out of existence. The owner could just pack up and shut the place down and end up in Argentina with
I think I mentioned it before, but I follow the fireplace principle. I consider all money in play to be sitting in a fireplace,
and a fire might start at any time and burn it all up. So if I'm not comfortable with taking that risk, then I won't take
that risk at all. But then again, someone could drop money down the chimney and add to that pile.
I only play with money that I CAN live without. But if my plays work in my favor, then they will allow me to live better
in the future.
You can't be in any game unless you're prepared to lose. I hope to win but yes, I am prepared to lose. It will not kill me.
As for exit strategies, I have one. But it's not as well defined as it should be, and I know that.
Currently I have a stop loss set for 17.90 for SEAS. If it trips I lose a buck a share, 385 dollars. That won't kill me.
I can change it at any time if I start thinking that maybe it's going to bottom out lower than that, and decide to ride it out,
but my current school of thought is that it has bottomed out already and the recovery, although slow, has begun. And
if I'm wrong about that, then so be it, call it a learning experience. The company has already issued press releases
stating that they are going to address the major issues that they have been criticized for, so I don't see any reason for
sentiment on the company to go more negative at this time.
Somebody might come up with some technical indicator that says it hasn't bottomed yet, and if that's the case, please
do explain how this technical indicator can predict the emotional state of the people who are trading in the stock. Honestly
I do not really understand or even see how technicals can predict something as hard to predict as human behavior, particularly
when money is at stake. The quest for money makes the most stable people do weird things.
I'm trying to learn about technical indicators but I'm just not (yet) seeing how they connect with human nature, which
has to be important if you are trying to predict what people will do.
As for options, it's not an option with my B account. Being a retirement account, options trading is not available from my brokerage,
and I don't really understand options but I do understand this: Bet wrong on an option and you lose ALL the money you spent on that option. That doesn't sound like it's for me.
Last edited by Carrerain4; August 16th, 2014 at 04:41 PM.
Really.... then toss away that alert service because 99% of their alerts are less than $0.50 and probably most of those 100+% type gains are in the $0.05/share or less.
do you honestly think setting that stop-loss protects you??? It may not, you know..
All a stop-loss does is initiate a market order to sell your stock at the best price it can get. It could sail through that Stop-loss and not get filled if there is another major sell-off, though it will enter your order to sell it....
let us say the market opens with a drop to $17.50...it will try to sell your stock at $17.50 but if the price falls further your sell order falls as well and it depends on where you are in the queue ahead of you as to when your order fills... when it reaches the bottom of that spike your order will probably be filled there.....as you watch the stock recover.
Stop-losses may bail you out but they are no guarantee to do it at the price you want.
frankly I would not even try to do so with that attitude to TA. You don't have the mind set for it.
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Well, mindsets can be changed with a little information. Such information might include some evidence presented
that shows that someone has consistently done well based on TA.
I can be persuaded, and even convinced, if shown adequate data.
But at the moment, I don't have any information which convinces me that the actions of people who are pursuing money
by trading securities (which I would argue is more difficult even than gambling as when you gamble, you gamble against set odds) are likely to be accurately predicted by any form of technical analysis.
I am neither dismissing the idea nor embracing it. I simply don't know what to think about it. I lack data and evidence.
I am aware that a stop loss does not carry a guarantee of execution right on the set stop price. It is quite possible
to miss that mark by quite a bit due to rapid movements in price and delays in trade execution.
once you start thinking about what you can buy with your unrealized profits from trading, ...you're doomed to failure.
learn how to trade - focus on process vs. outcome
the worst thing that could happen to you, at this point in your development as a trader, is that by some random chance you made money
you'll mistakenly think that you know actually know what you're doing, and that would inevitably prove to be disastrous
for example: you are playing blackjack and you are dealt 17 - you ask the dealer to hit you, and you are dealt a 4
bad process, good outcome
just to give you an idea of how difficult it is to CONSISTENTLY make money day-trading, is a quote from a recent dr. brett article
"In the average year, 360,000 individuals engage in day trading. While about 13% earn profits net of fees in the typical year, the results of our analysis suggest that less than 1% of day traders (less than 1,000 out of 360,000) are able to outperform consistently." (p. 15).
In other words, 87% of day traders in a given year lose money after fees are taken into account. About .28%--one in 360--is able to make money after fees year over year.
now you can take that .28 figure and reduce it even more, if you were to include traders who can actually live off their trading profits AND grow their accounts simultaneously
as a trader who has lived off his trading income and has supported a family with his trading income his entire adult life, i can tell you, i NEVER think about how much money i am going to make, or need to make, and my monthly nut is well into 5 figures after taxes.
all i am concerned about is if i am trading good - do i understand what is driving price and are my decisions sound - am i keeping my draw-downs to manageable levels - and am i turning short-term positions into bigger and longer-term winners when the opportunity presents itself
i am not concerned about the outcome; that will take care of itself; if the process is sound
Last edited by tigertrader; August 17th, 2014 at 11:05 AM.
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I'm new to this thread. Just wanted to say you really need a broker with lower commissions if you want to give yourself a chance at these account sizes. The same trades you are paying $14 commission for would only cost me about $1-$2. If you average up all of you winners after say 20 trades, and your losers and you average win size is, say, $20, trading that way with a lower commission would increase your average trade gains by more than 50%. If you asked any business man if he would like to increase his profit margins by 50% he would jump out of a window to know how.
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I can't tell if your posts are sarcastic or serious...Your telling an amateur to leverage himself to go all in with no solid strategy. Terrible idea.
As I stated earlier, it seems that your entire mindset is off. You are going about this the wrong way. People are to inclined to being nice and sugarcoating things for everyone. Sometimes you need to hear something that makes you genuinely stop and think, or strikes a nerve within you. So hopefully some of the things your hearing on this site will do that and save you from losing more than you need to.
Thank you (again) for your input and insights. Criticism and commentary is always welcome, and I LIKE to get it in a straightforward, direct, and un-sugar-coated manner.
Some of my earlier comments may have been taken in the wrong way because of the way I presented them.
The fireplace analogy is meant strictly to convey my understanding of the fact that money in the market is always
at risk. While I HOPE to make money on any given trade, I am fully aware of the fact that it can go against me
and I must be fully aware of that fact and accept it, or stop trading. There's no way to protect my trading money
and NOT put it at risk. To remove it from risk means to stop trading.
That's simply the point my analogy tries to make.
So, to follow the analogy, I'm comfortable leaving a limited amount of my money in a fireplace.
Though I'm interested to follow what happens in the penny stocks market, I state again, I'm not going to
play in that market. I do not believe you will see me logging any trades involving penny stocks. That market
is just too volatile, too unpredictable, and too risky for my tastes. But it's fun to watch, like watching accidents
happening in slow motion.
I am looking into other brokerages to reduce my fees. I am aware that by the standards of (I'd guess nearly all) other traders, I'm undercapitalized and reducing my fees would help out substantially. In my A account, right now I have to make 0.8 percent just to cover my fees, while for my B account I only have to make 0.18 percent to cover those fees,
but after I exhaust my supply of reduced fee trades, I'll have to make more to cover the fees.
So yes, going to another brokerage is definitely high on my list of priorities. At least for one account, the A account.
I'll likely let my B account stay where it is at least for the time being. I don't really want to sever my ties with Vanguard,
as I've done OK with their mutual funds in the days prior to deciding to actively trade.
Do I really have a gambler's mentality? Well, I have enjoyed some gambling on rare occasions and have had some
very successful (but not common) good runs at a Roulette wheel.
But I consider the stock market to be a totally different animal. It's not governed by anything as simple as a few
well defined rules of probability as any given game of chance.
I do not believe in just picking a stock and throwing money at it. I look for SOMETHING that gives me an indicator as to what may happen to it in the near future. Such as a good (or bad) earnings report or news about it. The problem there is that by the time I have read it, odds are that others have also read it and have made their moves first. It's hard to make money on a stock that has already hit its short term peak for the day and is now on the decline. Unless I felt brave enough to short it, and that worked out. But I see shorting as being very risky even in the best of times.
I realize that there is no quick and easy way to learn market behavior and certainly no way to become a great trader overnight. I simply hope to be able to learn these things quickly enough that I have a hope of NOT watching my
trade fund slowly (or quickly) dwindle to nothing before I've acquired a useful amount of that knowledge and insight.
I get the distinct impression that becoming a successful trader is like learning to be a good dancer: You can't do
either one by reading books. Oh, educating yourself on how the market works will certainly involve reading and learning, but book learning only goes so far. I'll have to develop judgement, and a "feel" for it based on (presumably) experience, as I acquire it.
Right now the biggest single actual stock-related question I have to judge on is this: What will really happen to SEAS? is it going to bounce back and pay me, or is it going to slowly glide down into the gutter and take my money along with it unless I cut the rope now?
My belief is that it's going to recover. The company has announced plans to improve the very situations they've come under criticism for and that can certainly help matters. They're profitable and the company is healthy, but they have
lost market share to other attractions. Can they reinvent themselves to gain some back? Can't tell from here.
My gut says, stay in and ride it out as per my initial plans. I have no news or information that says this is the wrong thing to do.
Tomorrow's activity with my smaller (A) account has not yet been planned out. I'm going to now spend the evening
reading the news and try to get a feel for what tomorrow may bring.