Wednesday 18 December 2013


Above you will see a weekly chart of NOKIA's stock on the NYSE. Along with it i've included the 20,50, and 200 DMA's simple. We can analyze this stock in various ways. Im going to try to keep it simple so that I dont get too confused myself. First off we can already see that the stock is in an upward trend and currently if we place a straight line (support line) below that trend we can find that the price is almost touching that line or is very close to it. Therefore, the price is at the support of the trend and has the possibility of bouncing off that support continuing its upward momentum. If you look closer at the more recent days we can see that the stock has had about 6 down days where sellers came in and believe that the price will not hold above $8 per share. Today NOKIA closed above 7.71 and engulfed the last 3 days of downward candles just like that! If tomorrow's low is no less than $7.50 than we can almost be certain to see a jump above $8.

My game plan: Wait for tomorrow's confirmation of a price no less than $7.50 and a closing price above $7.70.

Buy 100 shares @ $7.71
First exit 50 shares @ $8.15
Second exit 25 shares @ $9
Third Exit let it ride


"these are just my opinions and not a buy or sell recommendation. i hold no position in this company nor are they paying me to post this". 

Sunday 11 August 2013

Psychology of trading



GREED

In a winning scenario where the market is in your favor DO NOT let it fool you into thinking that your stock's potential hasn't hit its peak. Cover your "R" (the $$ amount you were willing to risk on the trade), cover your exits and ensure that your stop limits are in place for any reversals on the remaining position. In day trading let your remaining position ride until market close. 

For long term investments the same method can be used but continuous adjustment is needed as markets change over time.  

FEAR

Do not be afraid of losing on a trade. It's part of investing and you will learn from it. The worst is when you cannot accept your losses and suddenly your plan to exit the trade is delayed because of this. What usually ends up happening in this situation is an even bigger loss than what you originally had and this will certainly make you wish you had taken the first opportunity out. If you stick to your plan you will build consistency whether its a constant loss or gain you know that your committed and that's key when trading.  

HOPE

When you start to hear yourself hoping for a stock to be profitable or to turn around than at that point you know that your doing something wrong. Your showing the market a sign of weakness and your decisions are then solely based on emotions. "I hope this stock goes up in value and then maybe I will cover some of my gains. I hope this stock doesn't go down tomorrow or else I'm out of the money". Rather analyze what the market is doing and customize a plan so that you can eliminate the feeling of hope with the feeling of certainty knowing your loss and gain amounts accordingly.

REGRET

Missing out on a potential movement or feeling remorse on a decision you made that cost you money won't get you anywhere. You have to learn to move on and look for the next potential opportunity with a clear mind. If you missed a good investment opportunity don't be worried the market has plenty more for you in the future. On the other side, if a decision you made cost you money clear your mind as you will definitely need it in your next trade. If you continue to feel a sense of regret in either two of the situations your almost guaranteeing yourself being consumed by the market on your next trade. 

Thursday 8 August 2013

The beauty of an ideal Stop


MNKD
Mannkind Corporation

Long 150 Shares @ 7.58, R = $15, limit = $0.10
Covered 150 shares @ 7.48, -1R Day. 
I'm proud of myself for committing to all my rules and not caring where the market goes (no emotions). Obviously it would have been nice to come out on top but the fact that my R was very little increased my comfort. Good Day!



Looking at the image above you can clearly see that MNKD built a resistance at 7.57 pretty much after its gap down from the open of the day. The floor was around 7.47 to be on the safe side and it also tried to dip below that twice within the same time frame. When viewing MNKD on the 5 minute, daily, and weekly I saw a potential buying opportunity at 7.58 with a stop loss limit of 0.10 which would bring me little above the low of the day or support. In addition to that I took the market conditions into consideration and seen an upward trend to support my decision. Once MNKD hit 7.58 it quickly rose to 7.65 but couldn't break it perhaps due to market consolidation. What I wanted to highlight on this trade is how the correct STOP could be a game changer for you. Knowing your stocks High and Low before placing a trade is very effective because it gives you an idea of how much potential the stock has in going both up or down. Furthermore it gives you an idea of what degree of risk you can take and where to place your selling limits if your longing or your cover limits if your shorting. Without this very important information your limits if not placed appropriately may never reach its target. Ultimately leaving you holding on to a consolidating stock if not a losing one.

In my example I had a 0.10 cent stop loss limit which allows me to cover the first half of my position at 7.78 (0.10 x 2 = 1R, where R = $15). The high of my stock was 7.88 just .10 cents away from my first cover position. Not good. Reason, because it would take a while for this stock to reach 7.78 which in turn leaves me with either a consolidating stock at various price ranges or a losing stock and I'm out 1R for the day.

Instead my risk on this trade should have been at 0.06 as you can see around the time I purchase it the floor was at 7.52. And going below the 7.52 would have meant it would have needed to break its trend as indicated by the dark green line on the chart above. So hence, having a price target at 7.58 and a 0.06 risk would have been more ideal and allowing me to cover half my position at 7.70 rather than 7.78. Potentially a better trade overall.



"these are just my opinions and not a buy or sell recommendation. i hold no position in this company nor are they paying me to post this". 

Wednesday 7 August 2013

The Power of Paper

A paper trade is a trade that is done without taking any real monetary risk. In other words its a trade that you do not physically use real cash on rather you can write what your buying or selling at the price you want and record your gains and losses all on paper. The downfall to this is that you could be missing out on potential big gainers. However, there are more benefits to this method such as learning how to trade if your new to it, not incurring any real losses which puts you in a comfort zone to learn better. You want to make sure you are not just placing one trade after the next without understanding truly why you are placing that trade because then you wont be learning much. Treat each trade as if its a real trade with real money being used so that you can make more realistic decisions and hence you can be more prepared when the time comes you will be trading with real money. 

WEN (0.05 risk, R = $10)
Longed 200 shares @ $7.61.
Covered 100  @ 7.71 
Covered 50  @ 7.81
Covered 50 @ 7.79
-------------------------------
Total R = 3R gain

SGOC (0.10 risk, R = $10)
Longed 100 shares @ 2.35
Covered 50 @ 2.55
Covered 25 @ 2.75
Covered 25 @ 2.75
-------------------------------
Total R = 3R gain

PXLW (0.10 risk, R = $15)
Longed 150 shares @ 4.93
Covered 150 @ 4.83
-------------------------------
Total R = -1R loss

Todays R = 4.5R gain

I reduced my R from 50 to 15 because I felt that by doing so my comfort level would be higher along with my confidence when placing a trade. The last thing you want is losing 50-100 on a single trade. By having my R at 15 I know that even if I take a 1R hit each day I'm only down $75 for the week not including commissions and fees. This strategy of reducing R size is very important as it will allow you to be comfortable letting go of losing stocks without feeling too much of a blow compared to being down 50-100.

I will continue making paper trades for the remainder of the week and make a real trade as I see fit. My goal is to make one R for the week. Im already up 4.5R's.

 

"these are just my opinions and not a buy or sell recommendation. i hold no position in this company nor are they paying me to post this". 

Tuesday 6 August 2013

1.5R losing day

YELP
MANNKIND CORP. 

YELP & MNKD. Both showed various signals for investors to Buy. Unfortunately that didnt turn out to well for me today as I was down 2R from YELP but up 0.5R with MNKD. Remember your 'R' is the amount of $$ you are willing to risk in a given trade in the case your stock reverses on you. I longed 76 shares of YELP @ 52.90 hoping to release half my position at 2R which in this case was set for 54.20. That's a risk of 0.65 cents per share, which is too massive of a stop loss limit given the circumstance that YELP's high for the day was below 54 in the beginning of the trading hour.

On a more positive note I managed to pull in 1R from MNKD longing 500 shares @ 7.36 and covering all my position @ 7.44. The reason I had to cover my whole position was because I wasn't aware that MNKD was scheduled to release its quarterly earnings today and so I did not want to risk losing if MNKD reported a loss.

As you can see clearly I was not prepared enough for this trading day given the fact that I spent all weekend educating myself and observing different stocks to potentially trade. One big mistake I made today was that I did not follow my RULES. In fact I broke the same rule 3 times in one day. Note to self, never exceed your 'R' amount for the day. This can be extremely hard to do especially if your at a loss around 10:30 am and have the urge to regain some position, but nonetheless if you want to become a successful trader you must always FOLLOW YOUR RULES!.

1. Two other things I want to work on is ensure that I'm observing a losing stock in the case there is a gap and my stop limit is missed.
2. I want to reduce my 'R' to 15
3. Don't play stocks whose earnings release is scheduled within a 3 day time span at the very least.


"these are just my opinions and not a buy or sell recommendation. i hold no position in this company nor are they paying me to post this". 

Monday 5 August 2013

Quick Side note



"Avoid using candlestick patterns if the price is influenced by news. News overrides candle stick patterns. Candlestick are nullified when the news it let loose"
"When the real body is relatively smaller (Doji & Spinning tops) and each body subsequent to that is the same or smaller this most likely indicates that the stock is losing its momentum and that a possible reversal may be underway". 



No Trade Day

STXSBBRYSPEX
Stereotaxis Inc, Blackberry Inc, Spherix Inc.

I had STXS (again), SNTA, BBRY, AMD, MTL, SPEX up on today's watch list. I only wanted to observe SNTA, AMD and MTL but the remaining 3 I was looking to play. Did I forget to mention you should also have the data for the markets open as a reference to view where the market is trending. Anyways, I wanted to highlight some of the positive moments I had today and some things I need to work on.

Highlights:
1. I was NOT emotional especially missing many potential opportunities I remained calm and avoided possible failures.
2. I constantly looked at my rules to ensure I had everything checked off before placing any trades.
3. I placed "stop limits" fairly safe for both buying and shorting orders. This may have or may have not helped me but I wanted to take extra precaution today only because I needed to familiarize myself with the market between 1-4 pm (I usually start around 9 am).
4. I kept my 'R' the same throughout the day (R = max $ loss on a trade). I had the urge to increase it to make a quick profit but I know this would be breaking my rules so once again you must follow your rules at all times!
5. I did not trade unknowingly. What I'm referring to is the fact that some stocks were just too confusing to understand when looking at the candlesticks so I told myself forget it! Stay away from a trade if your not 100% sure of what you are doing. As obvious as that may sounds there are many novice traders who make that mistake. Not good.
6. I reviewed market data constantly and found possible correlations with certain stocks. This definitely helped me in my decision making.

What I need to work on:
1. How markets react to Buy and Sell order towards end of day. I noticed when placing various short orders I was getting the same message repeatedly for different stocks. It said "There are not enough shares to place an order of your share size, please reduce the number of shares or contact...for assistance". What it meant I was unsure of as it was my first time getting the message. I quickly referred to my friend and he advised me to look at previous days volume, and I had noticed that the previous days volume was significantly low as was the current. Low volume trades are harder to place.
2. Make a list the previous day with a minimum of 5 stocks to trade.
3. Look at one year High's and Low's. This is fairly important as it could indicate a possible breakout if price goes above 1 year resistance or below respectively.





"these are just my opinions and not a buy or sell recommendation. i hold no position in this company nor are they paying me to post this". 

Sunday 4 August 2013

Stereotaxis Inc.

STXS


I have been watching this stock for about 2 days and anticipated it to climb higher the business day before its Q2 Earnings release. Was I 100% sure it would increase? Absolutely NOT! Opening @ a price of $4.18 this beauty took a 75% leap by the end of its closing day and more than 100%+ during market open. That's double your investment. Luckily I was able to spot a bullish movement around the $5 dollar price range. Jumping from $4.18 to $4.98 within the first 15 minutes of market open shows heavy selling pressure around the $5 mark. In fact this point on the chart in the previous days is a BIG Buying Zone but as you can see sellers came in and brought the price down to $4.68 a share. Yes this stock is very volatile but with the great news about the company's FDA approval and the Q2 earnings release along with various technical indicators this stock showed a powerful upward trending signal. And that it did!


From the chart below you can see that I Longed 333 shares @ $5.01 and covered all my position @ $5.15 within 2 minutes! My intention was to however sell only half my position at $5.15 to lock in at least half my 'R' (R = max amount willing to lose on trade). Since I had a previous order in place for a stop limit to protect me from any major swings my order wasn't being accepted. Had I sold half at 2xR and let the remaining ride this could have been a big day since the stock did climb to $9 per share from a $4.20 Open the same day!

Always, Always, Always make sure you know your 3 E's. Entry, Exit, Escape.








"these are just my opinions and not a buy or sell recommendation. i hold no position in this company nor are they paying me to post this".