|Watching how a stock trades is just part #1, you also have to understand coinciding options, charts, near term catalysts, short interest, and financial fundamentals including earnings, offerings, institutional interest, etc.|
Nailing bottoms is complicated, and it sounds like you are using stops. Those stops can be taken out by Market Makers when they are fishing for cheap shares. They see them, and so do fundie, and pro Traders.
In regard to swing trading, that's the way to go, even if you have 25K in your account. Don't count on the day trade, if it happens, great, but understand the value in the stock and where the value lies for you as a Trader/Investor.
Let me explain further: price to target ratio. If a stock is trading at .80, and it has an average analyst target of $5, then you know it's a pretty safe swing and the upside is greater than 50%. In this case you can buy in small lots. 100 or 1000 depending on your funds. So, if the stock trades at .80, and then drops to .75, you and take 100 more, making your average in the .77 area. If it drops again, you have cash to take more and can average down further, till you gain a "full Hand", whatever size you want to take.
I don't recommend day trading. You can learn more on Investopedia.com. Hope that was helpful
Re: 2 Questions from a rank beginner.
These are my opinions. Please do your own DD :) Happy Trading
| Reply to SiliconMagician - Msg #686 - 09/20/2019 03:02|
2 Questions from a rank beginner.
I'm brand new to stock investing. It's really funny how I became interested in it. I watched The Big Short a couple months ago lmao.
But anyway it got me thinking about it so I got a copy of Analyzing Securities and The Intelligent Investor and started watching hours and hours of videos on YouTube and reading everything I could find about the basics of stock investing. I started analyzing stocks and learning how to use candlesticks with bollinger lines to predict trends.
I opened an account with WeBull am now paper trading with $500 to simulate my opening account.
Wednesday I made my first trade. I figured that natural gas and oil was a good buy this week and started screening around for fossil penny stocks and found an LNG carrier with 6 ships that for some reason had a noticeable repeating pattern over the last 6 weeks. Every 7 to 10 days the price would spike from 1.20 a good 20-40 cents over a 2 day session and then drop back down to 1.20 a share.
So I saw it was in the trough and the timing was about right on Wednesday morning so I bought in at 1.29 a share for 200 shares. Sure enough the trend repeated again and the share price jumped to 1.45 a share and I sold my position 15 minutes before the bell at 1.44. Not bad for a first time.Today it climbed to 1.67 a share but then the price dropped drastically and quickly down to 1.43 and triggered my sell order but then continued to drop all the way down to 1.32 at close. So I ended up breaking even for today.
Now here is my loss strategy. I set my stop-loss for 1 penny below what I paid for the stock. I know what this means. If the price drops early and then rallies big for the day I lost out on profit. Well that's fine with me. I'd rather lose profit and break even for the day than take a loss on my initial investment. For now that $500 is sacred. Because my goal isn't to make the biggest amount possible that I can that day. My goal is to add incremental amounts to my account daily. $10 here, $20 there. $1-5 dollars on bad days. Over 6 months to a year of consistent 5, 10,20,30 dollar days. That $500 will pretty rapidly become bigger. Then once I have a comfortable egg of a couple thousand dollars I can take a few risks. But you won't see me doing any shorts or margin buying ever. Not for years anyway. Right now I just want to pinch a few pennies and eke out a dollar here and there over the next year.
So now that that is out of the way first question:
Is this a bad strategy?
Question #2 has to deal with the fact that until I get $25,000 in my account I cannot day trade. So I have to find a good swing strategy where I try to anticipate a stock rising and possibly peaking the next day and purchasing that stock before the closing bell, or during aftermarket trading in the hopes that I can then sell the stock the next day for a small profit.
Is this a bad strategy?
Basically, while I would like to maximize ROI as much as possible, until my $500 has grown to at least $1000 I'm sacrificing at least some profits to avoid risk.
So that is it for my questions. I'm an RTFM kinda guy so if you point me to the right links I'll read whatever is necessary so feel free to post any good links to knowledge. I will read them for sure.
NOTE: This message was originally posted on 2019-09-20 00:46:23 by the SiliconMagician.