Tired of these repetitive lessons yet? Well I am, so this is my last one this week. But it’s important to make sure that you understand these very basic trading principles.
Questions:
1) Why would you be paying attention to this stock yesterday?
2) Is the trend up or down? Would you be looking to get long or short this stock?
3) Where would you get long/short this stock yesterday?
4) Where would you put the initial protective stop?
5) When would you stop trading for the day?
6) Where would you exit the position?
Answers:
1) Because it was unusually active, and very volatile.
2) Up. You’d be looking long.
3) Long at 12.19 on a buy stop above the 10:30 bar. (There was also an opportunity to enter above the 12 noon bar.)
4) Tighter: 12.12. Looser: 12.03.
5) Right after you enter the position or lunchtime, whichever comes first.
6) End of day. Could sell half, carry half, or just close it all at once.
Back in the ancient past (1997?), I hung out at Avid Traders Chat. There were a bunch of nice, bright people who congregated there to chat about the markets and trading: alice, barbarian, bondzai, colby, craig, dr. doom (Teresa, one of the few women), fiendbear, grizzly, guliver, humble, jacad (later known as samurai), jasbond, jwhite, mina, mitstop, notop, oleman, soup, swtrans, temple, topxprt, twocents. I can’t remember everyone. I was modestly known as ’smartmoney.’
Many of us pretended to be more savvy than we really were, but everyone contributed something and it was a pleasant place to shoot the bull (no pun intended). The most revered chatter was a retiree in Florida who went by the handle ‘oleman.’ Here’s some of the common sense advice about trading that he posted at Avid back in the day: The Collected Wisdom of ‘oleman.’ It’s good stuff and should be read closely.
No comments:
Post a Comment