Nothing quite so elaborate.*
I was just thinking that, instead of selling ALL of my shares at a particular time and price, I would only sell HALF.*
I have set a limit order to sell half of my TVIX for 21 dollars, but I might get impatient and go lower if it isn't reached in about 2 more weeks. We are all expecting a dramatic rise in price, so I don't want to play around with it. But then again, I feel like I am in a rut, just sitting around waiting.*
As for keeping track of different blocks of the same "stock," I was thinking more along the lines of using a pencil and paper notebook to keep track of what I'm doing. If I sell half of my shares, and then buy back lower, I could still sell the other half the next time it reaches a high point. I could then buy back the second half lower, because two different trades have two different settlement dates. The brokerage account would tell me what I have available for trading, and I would take it from there.*
If it keeps going up, then of course you might want to sell your remaining shares at a higher price, or even buy back in at a higher price. But if it goes down, you at least have the chance to buy back cheaper, and lower your average.*
I want to give myself more choices, and do more experimenting. I don't want to be either too rigid or too impulsive.*
The cliche here is "Don't put all your eggs in one basket." Why trade your entire position on a hunch, when you or your advisers could be wrong? By hedging, you can still win, even if you lose. You can say to yourself, "Well, I really messed up on that trade, but I still did the right thing with my other half of the same stock."*
Of course, the more different things you have going, the harder it will be to keep track of. I worry about the day traders keeping their printers busy all day, and piling up stacks of receipts. How do THEY keep track of what they're doing?*
On the low end, the fees limit what can be done. If you pay 10 dollars per trade, then you need 20 dollars for the round trip. If you have 100 shares, the price per share has to go up 20 cents to break even. If you have 25 shares, the price has to go up 80 cents. If the price goes up just a penny higher than you need to break even, then at least you would not have lost any money.*
If you have 1000 shares, the price per share has to go up only 2 cents to break even. That would be nice. The amount of gain doesn't matter, as long as the direction is up.*
The problem comes when people are hoping for big gains, and end up with big losses instead. Splitting your trades would leave you with both smaller gains and smaller losses. After becoming familiar with a particular stock and how it moves over a long period of time, you might develop a sort of intuitive experience or "feel" for what is likely to happen. Then you could be a little less cautious.*
At least, that is my current thinking on the subject. I still need the experience to back it up.*
