MATRIX Penny Stocks

[blurring]

Cap: There is a ton of value in identifying a strategy prior to entry, I totally agree. Doing so provides the trader with a blueprint for action. An if/then structure that very much helps take emotion out of the trade--an indispensable tool. Identifying and implementing a firm strategy is an essential approach for trading.

However, flexibility is also needed.

I have, in the past, like most traders, applied a strategy type to a particular stock (many times, in fact, with many stocks) only to find that my skills in identifying the trade type were insufficient to what the stock was really doing, causing me to sell at the wrong time. Other times, conditions for the stock I happened to be in changed, but my insistence on sticking to rules (rules that were an outgrowth of the trade type, such as rigid selling EOD, because such and such trade is a “day trade”) led also led to bad trades.

You wrote: “Which means that I never hold positions that I buy under that strategy.” --in this case, a daytrading strategy.

Strong statement. Never. I have the feeling that MMs are real good at taking advantage of traders and their rules. Ironic, but it’s taken months for me to shed that type of learned inflexibility.

There are so many scenarios. What if the stock closes with a gradual strength, having created an ascending triangle intraday, and leaves a hammer on the daily chart? Will you still sell all your shares EOD, because your rule calls for that action, no matter what? If you do, you are likely to leave money on the table. Or what if you have identified a three-day hold, but the stock spikes an hour prior to the close on the second, then fades, and loses a key support level EOD, and then you notice that a pump and dump chat room has been hyping the stock all day? Will you hold no matter what? If you do, you are taking an awful risk at a gap down.

It is absolutely essential to set up trading rules, but I think outlining a blueprint for a complete trade prior to purchase, as comforting as it is, can lead to problems. jmo, fwiw