Did you profit off the last bounce?
By TheWild1 at 19 March, 2008, 2:58 am, Categories : Financial Markets
I know I did!
With great watches such as NUE, R, and CAT, I was able to have one of those memorable trading days. But I am sure not everybody profited greatly of the bounce. If you didn’t, then did you miss the last bounce? Was it something that you could control? Did you try to figure out how to not miss out on it again? I am pretty convinced that the market may have days like these sprinkled in with a lot of terrible days for a while now. So it may be in your best interest to try and capitalize on these opportunities.
Before this year I was normally a “month trader” as I like to call it. I would hold position for a month or two and then make some changes. It worked wonders for a while; however, through this current market I just don’t have the patients to wait it out. So if you have the ability of taking on some risks, then here are some things I do to make sure I don’t miss these great bounces in the stock market.
1. Stay Prepared
Depending on what your method is, you should be keen on actively keeping a close eye on your watch list. One mis-perception that people often consider is that they need to totally come up with a new plan. That is not the case. Keep watching what you think will work well within your system and what the current market allows, and set a detailed plan of what you plan to do, such as: buy target, price target, and exit strategy. Generate a list of stocks that you will actively check every day. If there are some down days still pay attention to the stocks. A true winner will show you some green eventually.
2. Get Your Orders Ready
One thing I like to do is set up stop market orders, or orders that will take action once the stock hits a certain price (Activation Price). The price will usually be the buy target that I have set up. What I like about this, is that you are not necessarily dependent on what the stock market will do. If the market comes out in the red, and everything is going downhill, then you don’t need to worry about your order going through. I’d rather make no money, then lose it.
If an order doesn’t go through on the day, then keep re-evaluating your stocks and reset buy stop market orders. These orders have worked wonders for me, and saved me tons of money. Great stocks like CAT and NUE have made me a bundle during the past weeks.
If you want more control, you can even use stop limit orders. This is where you set the price you are will to execute at.
3. Take Your Profit and Run
Don’t get too greedy. Although you should already have your exit strategy in place, unless you are willing to hold on to the stock for a long time, take what you can get and get out of it because you never know what the next day will bring or even after hours.
Remember…
It is a great practice to try and learn from your mistakes so you can prevent them from happening. So if you keep missing great trading opportunities, then figure out what flaws are in your system. By following these simple steps, I am able to prosper during these volatile times in the market, so far…
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Hello . Ive been reading your blog now for a good month and would like to say thanks. I was trying to get into some puts on the DIA yesterday before the bell but thought I cuould get a chance today on little more strength. Oh well. But I have a few qeustion for you I hope you can answer.
1) I was reading the market ticker entry today — What exactly is deleveraging by a hedge fund. I ve heard that there is worldwide deleraging going on. What eactley does this mean. Is it that they have to sell the assets they bought with borrowed money to give it back to the big banks because the investments are losing and dont want to be debtors to the bank. Im guessing this is a margin call. And beyond this, cant that money being paid back to the banks be used again to prop up eqwuities. So isnt it the same money only by a different investor? BUt i read in another article that this moeny used for or from house mortgages, will just implode into nothing, becuase it was money that was magically made up by wall street. That is there is no money on the sideline, when the deleveraging is over, the money that was created by house appreciation will be destroye?
2) I also read that if there is an explosion at one of the bond insurers it will create a cascade effect of exposing the “wrapped investments” at the investment banks. This will cause cascading cross defaults in other places. What does this mean and How exactley does this work? ANd what is a capital ratio violation?
3) How did the fed screw BSC. I kind of get how it helped jpm, but what if anything did the fed do to hurt bsc. And if the did why would they do it? Plus how and who decided bsc was only worth $2. Jim cramer makes it sould like JPM is just that astute. Others make it sound like the fed and JPM are crooked. I know it a lot but im on a mission to learn. My trading hs been profitable but I want to learn the overall picture better. Thanks. Eddie B.
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I’ll be honest with you. Your guesses are just as good as mine. Although I could probably benefit significantly from knowing all this, all I need to know is to stay away from the financial sector. Sorry I couldn’t answer you question in full detail.
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