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Re: lowtrade post# 42409

Sunday, 06/15/2014 11:36:31 PM

Sunday, June 15, 2014 11:36:31 PM

Post# of 47285
lowtrade,

But since the Game goal is max profit over 3 months, it gets easier.



The game direction is actually three months, but still; short-term strategies should still apply.

I post it's all in the numbers, often, at the board. And one needs to set up a business plan to attain success, trading the market. If your business plan is get as much gain as possible, in a quarter. That plan should be designed differently then one producing income or retirement funds.



It dawned on me when you said "business plan." I have been using method I believe what you called One Order Closes Another (OOCA). This in part while using the Average True Range (ATR) to better gauge entry and exit. I have been using the 1/4, gain/loss ratio. This part has been extremely helpful. So when it comes down to diversification, I should be diversifying 25% or in $25,000 increments.

Thus you want to trade in the small cap area. Because math produces larger gains, the less expensive the stock. Also you receive larger gain, when a stock price increases, then when it decreases. So shorting should be an exception, more then the rule.

Swing trading in the under $15 range, would be the sweet spot for a 3 month trade plan, with largest profit as goal. If the goal was successful trade ratio, price range wouldn't matter as much. You could diversify and use position sizing to reach a fixed financial goal. Building some safety into your wants and needs business plan.



As you know I'm a long-term investor. However; the past few months I have began learning how to swing-trade. I have been testing strategies, using the resources you have given me and using other resources that I have found helpful. I'm still not comfortable with the swing-trading strategy using real capital, but I will use it for the game.

Apparently, I'm the only student in the class of 30 who trades/invests. The professor told the class that he is a investor consultant and a technical trader. I wanted to speak to him about technical trading, but I didn't want to seem like a 'know it all' because I'm not and then have dismal performance in the game.

As for using margin trading, IMO stay away, in a game or real life.

Margin trading, IMO is mainly for high risk gamblers in the market. And trading a margin account, requires much more attention being payed to both your account balances, (especially if pattern day trading). And plays that are active. Gain/loss level, will effect overall profit/loss on margin traded round trip trades, as gain/loss interest; on loan proportion, will effect results greatly. (They don't take the loss, you do.) Add to that; there are so many rules, over seeing margin trading. Event with attention, you may end up with unexpected charges and fees, when the trade is complete.

https://www.tdameritrade.com/retail-en_us/resources/pdf/AMTD086.pdf

But hey, if a stock is going crazy and you want to go large, can't beat an extra $100k in the mix. Just remember to take profits when they present. As personal losses increase larger on a margin trade, when a retrace doesn't bounce. (page 2 in the link above) Really really need to protect those gains, when using margin loans. Plus break even is now margin interest, fees and regulatory costs, higher then entry.



Your opinion is much appreciated. After these statements, I still can't decide weather I should trade on margin or not. I would feel more comfortable trading on margin if I was comfortable with the strategy weather it is real capital or in this case, paper trading. I need to make a decision before I go to bed because I need the orders ready for the morning. I'm leaning more towards margin trading. I will stick to the regular exit strategies and to the best I can.

Thanks for the question. Good subject and I haven't seen many questions lately.



Thank you for answering the question! I have been busy so I haven't been able to bug you with questions like I usually do!