The Chic Board

[Ichauway]

One of the best here.

teabeebubbles brings you TONS of VALUABLE WISDOM
Learn it now or let the markets take your money...either way you'll learn.

---- H e r e y o u G O ! ! -------------------------

if you dont know how to read a chart dont trade. EDUCATE, EDUCATE, EDUCATE, read, read, read....

Leave the emotions at the door... the whole market is based upon giving confidence in bad stocks and scare you out of the good stocks you are holding.

Know your entry points and exit points (both up for gain and down for loss) Many newbies spend all their time trying to find out when to enter a stock and have no idea as to exit points.

NEVER MARRY A STOCK.... I set a loss ratio of 5 to 8 percent max... UNLESS I KNOW THE STOCK AND ITS HISTORY.... this does not include when a stock shakes....

Do not use money you NEED for other expenses. All money used for trading should be extra money not needed for anything else but trading....

There are alot of good traders around... Initially, I would track who is recommending what stock and at what price they are recommending it and track it on paper.. This will give you and Idea who to follow. Remember the stock market involves money, therefor you should have your guard up at all times.

In closing, a famous person once said the hardest part of becoming a millionare is holding on to it.... there is always someone trying to take it from me.


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if you dont know how to read a chart dont trade. EDUCATE, EDUCATE, EDUCATE, read, read, read....

Leave the emotions at the door... the whole market is based upon giving confidence in bad stocks and scare you out of the good stocks you are holding.

Know your entry points and exit points (both up for gain and down for loss) Many newbies spend all their time trying to find out when to enter a stock and have no idea as to exit points.

NEVER MARRY A STOCK.... I set a loss ratio of 5 to 8 percent max... UNLESS I KNOW THE STOCK AND ITS HISTORY.... this does not include when a stock shakes....

Do not use money you NEED for other expenses. All money used for trading should be extra money not needed for anything else but trading....

There are alot of good traders around... Initially, I would track who is recommending what stock and at what price they are recommending it and track it on paper.. This will give you and Idea who to follow. Remember the stock market involves money, therefor you should have your guard up at all times.

In closing, a famous person once said the hardest part of becoming a millionare is holding on to it.... there is always someone trying to take it from me.

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By saying "do paper trades", It means this:

Start doing your research, frequent traders boards who seem to have something to offer. Identify companies whose stock you might consider trading. Then research the heck out of those firms (I would recommend you stay away from penny stocks as others have recommended. Often there is little hard data on such companies and even more often what data is available is unreliable).

Then decide what you want to trade. Are you going to swing trade? Are you going to day trade? (Note: If you don't know what these terms mean, my following advice is even more important).

NOW .... execute your trades on paper. What this means is write them down on paper next to your computer. DO NOT log in to your online brokerage account. DO NOT call your broker. DO NOT actually purchase, sell, short, or option any stock. JUST WRITE IT DOWN ON A PIECE OF PAPER NEXT TO YOUR COMPUTER. Continue trading your selected stocks this way (on paper next to your computer), keeping track of what you are making (or losing) on each trade. See ... now you are learning! And you haven't lost a plug nickle yet, even though you are getting an education.

Continue doing this for as long as it takes. Believe me, you will start off losing money (on paper). Keep doing this until you start making money (on paper) and feel confident in what you are doing.

Now ... try the real deal. DO NOT risk a lot of $$ starting off. Only risk what you can afford to lose. If you do lose, go back to paper trading until you get better. You may end up only paper trading for months until you understand what you are doing. GOOD!! You don't want to risk real $$ until you REALLY understand what you are doing. Until then, leave your $$ in a savings account.

Otherwise, you may as well go to Vegas or flush your $$ down the toilet.


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If you're gonna play the pennies....

You 'MUST' consider the following!

Subject: 'Leverage' aka 'Money Management'

You must use percentage/leverage, if you do, it becomes your friend.

Let's say you bought 'XYZ' @ .02 and for whatever the reason, you're still holding all your initial and subsequent buys. You come home from work one day and find it closed @ .075.... that's over 300%.... "I think you're starting to fall in love?" if you don't sell some now! Don't get caught holding a bag because you read some faceless and nameless post that said 'It's going to .12".

The thing has already given you over 300%.... in order for it to give you 1 more 100% it must "DOUBLE!!!".... 'hello!'

You're overdue. Sell some of your little boy/girl friend and go to cash and start looking for another 'Lolla Lovely' or "Mr. Wonderful'.

The attributes your new love interest should have should be the following:

1) The PPS should be at least 200% lower than the PPS of the stock you sold.

2) It should meet the same criteria that made you buy 'XYZ'.

3) If you don't find it today......"THERE'S NO RUSH".......'that's why God made tomorrow!'

The more shares you have the more 'bang for the buck'.

"LEVERAGE is KEY"!!!!!
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some things i've learned and remind myself of:


-ALWAYS PROTECT YOUR ACCOUNT - don't put all your money on one issue, one halt and you are done...

-LOCK IN PROFITS - u can always let some ride free

-DON'T CHASE ( if u do, you'll prolly be buying my shares ) - u can always wait for the dip, the inevitable dip..and if that does not come - there's 10 more trains leaving the station soon enough

-DON'T MAKE BOREDOM TRADES THAT BREAK YOUR OWN RULES

-TAKE A BREAK DURING THE TRADING DAY - some of by worst trades have come after a very good or very bad trade where i either felt invinsible or angry - and either state of mind will kill u in the market..

-DON'T GIVE UP ON HIGH VOLUME STOCKS - if the volume is great, time and time again these stocks will run and run after some consolidation..

-DON'T THROW GOOD MONEY AFTER BAD - i'll leave that up to interpretation - but suffice it to say the only time i average down is during a 5 minute period on a bounce ie - dlgi yesterday lol..

-EVERY DAY IS A NEW DAY - if u have a bad day, learn from it, re-examin your trades and where you messed up and do better the next morning

-TAKE MONEY OUT OF YOUR ACCOUNT (PROFITS) EACH MONTH AND PUT IT IN A SAFE PLACE...

-LOSE THE EGO...this is a big one, pride can cost u much...the markets have a way of humbling those who get a large head..

-I HAVE SEVERAL SPECIFIC DO'S AND DONT'S THAT ARE JUST FOR ME AND MY TRADING STYLE - make up your own rules that work for you and stick with what is working..

-HOMERUNS ARE GREAT - but singles and doubles and bunts can get the job done and don't require so much luck..

-LEARN TO SCAN TO FIND STOCKS - if you don't you are relying on others to do the work and they will get most of the reward

-MAKE SURE U ENJOY - if you don't enjoy trading and find yourself in a 1/2 state of panic, maybe this is not for you...it takes a certain type i believe
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PAY OFF YOUR DEPTS AS YOU CAN WHEN YOU MAKE A LOT OF MONEY IN THE MARKET
- There is no better reward than to have made a great trade where you've made lots of money on it and take most of that money out if you can. Once I was lucky enough to find a windfall that I used to pay off my entire depts and what a relief that was.

MY OTHER FAVORITE IS READ READ READ...
- I always read as a way to brush up on ideas I have either forgotten or need a refresher on.

My ABSOLUTE favorite book is "TOOLS & TACTICS FOR THE MASTER DAY TRADER
By Oliver Velez and Greg Capra (the Pristine.com guys)

It is the best 389 pages you will ever read in your trading career - and yes if you do this for serious money you must treat it like a career and invest time and money in getting great at it.


A Quitter Never Wins and a Winner NEVER Quits!
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1) Always know WHY you are entering a trade. Always know why you are exiting a trade. Every single trade.

2) Don't chase. Enter the stock at a level that makes technical sense, knowing beforehand what a technical failure in the stock looks like.

3) Always, always, always, use a stoploss, trailing or otherwise. Never hold a loser. This is dead money. However, also, never use a “physical” stoploss, only a mental stoploss. If market makers want shares, and they can see yours (with Level III), they will come get them. If you can’t trust a stock (because you’ve never traded it before, or because the technical reason for entry is comparatively weak) or watch the stock, and you have to leave your live charts, sell it.

4) Use Chatrooms and Stockboards as WATCH LIST fodder. Use these posts to build your watch lists only. Do not automatically jump in just because you see your favorite guru posting his entry. You are chasing. And, you are not learning if you do this.

5) Learn technical analysis. At a minimum: Learn how to spot resistance and support levels, and learn how to draw trendlines. Also, work on spotting common patterns, cup and handle, head and shoulders, ascending triangles, box formations, Fibonacci levels, etc. These are your tools; a craftsman has to be able to use their tools well.

6) Trust the chart. Have patience. The chart doesn't lie. It can’t. (But also know what your stoploss is).

7) Trade your day in a completely professional manner. Make it serious business. Don't allow sloppiness to enter into your mindset. The marketplace is completely unforgiving, and the sloppy get slaughtered.

8) Keep emotions out of your trades as much as you can. The more closely you can emulate machine-like executions, the more money you will make. Emotions will cost you cash.

9) Never, never, never chase a stock. Up or down. In or out. If you miss your entry, let it go. Another bus is coming soon. If you miss your exit, remain calm. Identify the next support level, and look for a bounce off that. If no bounce comes, exit, calmly, at that support level. Never chase stocks. If you chase, you are trading with emotion. That is a deadly combination.

10) Sell at least half your shares into strength as price approaches a technical area. Lock in profit. However, don’t close a position just because you have made a certain amount of money; sell for technical reasons. You’ll leave less on the table.

11) Be very selective, especially during low volume periods. Practice sitting on your hands.

12) Don't pull money out of a winner, or a fledging position, to chase another stock that might be moving.

13) In general, sell into strength, but into weakness (but only if the overall trend is up).

14) Especially for OTC, have a target exit in mind, at a point of resistance. Watch closely as the stock approaches. OTC stocks can plummet fast; the use of a simple trendline violation won't always work. Use Level II as a tool for entering and exiting a position only. Don’t watch Level II every single moment (unless you are scalping). Market makers will drive you batty.

15) Never try to "beat" a stock. If you get beat by a stock, move on to another issue, unless there is a solid technical reason for re-entry.

16) Paper trade for at least a few months. No one wants to do this. No me, not anyone. Everybody wants to jump in right after they're flush with their first success. And, bonus, guess what? Paper trading won’t teach you everything you’ll need to know. It’s not even that close to the real deal! But paper trading will help immensely. It’ll save you money.

17) Keep a trading journal. Use it. Always include commissions in the cost of doing business. Note your mistakes. Learn from your mistakes. The market punishes mistakes. You’ll want to learn as quickly as you can.

18) Build redundancy into your trading rig. Multiple connectivity points. Multiple access points to your broker. Multiple computers (in fact, multiples of hardware across the board if you can get it), multiple data sources. Stocks can drop very fast. You don't ever want to be blinded by equipment failure. You can lose money. Use the very best trading rig you can get your hands on. Then duplicate it.

19) Know your datafeed/charting software intimately.

20) If you play news, make sure your news server is fast, and make sure you fills are fast. Otherwise, don’t play news.

21) Keep learning. Never stop.

22) Stay humble. The market will eat your ego for breakfast.

23) Eat right, exorcise. Take breaks during the trading session. Learn to meditate. Then, meditate. This is a high stress business, especially while one is learning.

24) There is a human being behind every post; be nice to people in Chatrooms and Stockboards. They are helping you.

25) If you start to make a consistent profit, don’t forget to pay yourself.

and, finally, The Trend Truly Is Your Friend.
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Basher's Handbook
http://messageboardfools.com/bashers.htm

Don't Chase and Hold <--my problem
http://www.investorshub.com/boards/read_msg.asp?message_id=2817369

trade paper for a while! (simulation)
Investopedia.com

volume, float, share price, % of portfolio, and liquidity
http://www.investorshub.com/boards/read_msg.asp?message_id=2817380

compilation of other rules and important thoughts to consider
remember that you are the market. It is not some
ghostly shadow that does mysterious things out of your
sight. It is what you make it, what I make it, and
what every other trader makes it.

The market does not go up by itself, it's the traders
buying more than the sellers are selling that makes it
go up.

And don't blame every misfortune on the market. Examine
closely the actions that led to the disappointment and
learn from it.

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The Investment books: A Beginner's Guide to Daytrading Online by Toni Turner and her latest swing trading book. It shows how to utilize the market internals, reversal period trading and the Trin/tic and of course the S&P and Nasdaq futures, setting stops, buying off intraday support etc. Don't spend zillions on seminars, $100 books and trading systems that make only the producer rich.

Trading in the Direction of the trend of course but my best strategy would be sit on the sidelines until 10:00 a.m. Some traders go ballistic in premarket and at 9:40 or so shouting about upside and "nabbing" stocks only to have them sell short at 10:00 SPIKE HIGHS.



Prepare for gap ups that ultimately crap especially after earnings reports.




Once your stock appears in the Investor's Business Daily, its time to sell off and once its "recommended" as an earnings play to hold by briefing.com, get out while the going is good. Best time to buy stocks that are volatile is in the "anticipation" before an expected earnings report, mid-quarter report, etc.

chances are very high that the anticipation will end up in a rather strong reversal (see CYMI today for an example or the "INTC anticipatory mid-quarter update") Buy the rumor and sell the news makes good sense.



Prepare also for gap fills. Sometimes stocks are down so much in the morning that traders and even some investors look for a bargain and it gets filled quickly. Keep on the lookout for any earnings reports that morning or downgrades on 'favorite' companies that might cause early buying.
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trading
a stock and taking profits along the way to either get back your capital or lower your cost average...

example

IDNW

you buy 100,000 shares at .05..

you sell 25k shares at .06 on the first 20 percent move

now you have spent 5,000 dollars...
you have got back 1500 dollars

the 75,000 you have left has now cost you 3500 dollars...

than on the next 20 percent which happened to be this mornings gap you sell 25,000 at .07..
now you got 1750 dollars for that

now you have 50,000 shares left..
you spent 5k ,you got back 3250..
so your capital out is 1750 dollars for 50,000
which puts your cost now under.04...

so now becomes your options ,in an ideal stock move you wait for another move of 20 percent to sell another 25k,but you can change your target to suit you,me personally i like to sell enough from this spot to get the capital back and take a little profit and leave something left to go the distance in case the stock goes and i dont have to pay attention..

in this case i sold later in the day 40k at .07
and now have all my capital back from the 5k investment,
plus 1000 of profits and 10,000 shares left that i dont have to watch and can pay attention to other stocks without a worry in the world of the IDNW shares..

this is my definition of position trading,and only something i will do in a good market..
the goal is to make 500-1000 dollars profit on the trade and
have 10-15 percent of shares left in case a stock goes
from .10 to over 1.00 like the 200 that did in 2000....

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TAKE A BREAK DURING THE TRADING DAY - some of my worst trades have come after a very good or very bad trade where i either felt invinsible or angry - and either state of mind will kill u in the market.

Yep. If you aren't getting that high than your preperation to succeed will go down along with your success!

MAKE SURE U ENJOY - if you don't enjoy trading and find yourself in a 1/2 state of panic, maybe this is not for you...it takes a certain type

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"Good judgement is usually the result of experience. And experience is frequently the result of bad judgement. But to learn from the experience of others requires those who have the experience to share the knowledge with those who follows." B. LePatner
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DO determine the size of your trade based on a rationally selected stop loss point and your risk control rules.

DON'T select your stop loss point based on the size of your trade. This is backwards.


Here's an example: WXYZ is trading at 2.50, and there is a nice support level at 2.25. Also, my risk control rules tell me that I am not willing to lose more than $100 on this trade

The wrong way: "OK, let's see...I'm going to buy 1000 shares of this, so I better set my stop at 10 cents down so I don't lose more than $100. I'll set it at 2.40. (huh???)

The right way: "OK, let's see, based on my chart the best stop point should be at 2.25 which is a 25 cent per share loss. So if I don't want to lose more than $100 I should only buy 100/.25 = 400 shares.
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after doing #1

decide if you are going to make an investment or a trade.

there is a HUGE difference between the two.

Warren Buffet who is listed as the 2nd wealthiest individual in the world says you should never buy stock in a company if you would not be happy to own it at half its current price. he also buys large pieces of companies or entire companies with NO EXIT STRATEGY.

wait - i thought if it dropped 8 or 10% that means i should sell. well...if you bought it just to trade and you feel that's what is necessary fine.

decide up front.... am i just buying this paper to flip it at a higher price or am i buying a piece of this company because i believe in its long term potential. in other words - SEPERATE YOUR INVESTMENTS FROM YOUR TRADES.

read IHUB for information on how to TRADE but go here for to learn about INVESTING: http://www.berkshirehathaway.com

begin by reading the annual reports.

you need to know WHAT you are buying and WHY you are buying it.

be careful - if you want to TRADE shares of a company then dont view your purchase as an INVESTMENT. if you are investing in a company then you should view your purchase of shares as a purchase of a piece of the company and not necessarily as a trade.

if i own shares of a company and am long and view my position as an investment... the stock can drop 50% and i wont flinch...in fact, i will generally view it as a buying opportunity.

on the other hand - if im just flipping paper...the stock doesnt even have to drop. i might sell it for the same price i bot it for or sell it if it dips 1% because i didnt buy it as an investment - i just bot it to trade.

traders make money and investors make money...but i dont see any traders on the list of the worlds wealthiest people.

Berkshire Hathaway stock is $93,000.00 because Warren Buffet decided early on that he would not split the stock in order to keep TRADERS away: http://finance.yahoo.com/q?s=BRKa&d=t

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Have a written plan for every trading day. For example:
Know where your stops are for every thing you already own,
Have a list of already charted stocks that you would be willing to buy for the following day and what criteria they need to meet in order for you to buy them,
If you alread know what 'don'ts' your susceptible to, write them down for re-inforcement,
(that's just a couple - put in your plan what YOU want to do)

Rarely will your trading day exactly follow your plan but having a good plan can take a lot of stress out of trading and will almost assuredly increase your chances for success.
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So you want to daytrade? First thing you do is go to the bank. Withdraw $10,000 in hundred dollar bills and bring them home.'

Go out to the backyard use the money to build a nice pile in the bar-b-que. Pour starter fluid on the money and set fire to it.

Watch it all burn completely to ashes that can't be taken to the bank and be replaced with new bills.

Now you know what is like to lose $10K. If you can't do this, then don't daytrade at all. You don't have the stomach or the money for it.
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....ALWAYS keep some funds available for that surprise stock that takes off like a rocket or a real value that you've been waiting for. It's an awful feeling to watch a run that you miss because all funds are tied up.
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Do trade with the strength or weakness of the industry or sector that the stock or option you are trading is most closely related to. Don't forget that there are ways that you can use to predict changes in the direction of that trading:

Short Term Indicators vs. the SMH; any index can be used - The first set of short term indicators I use are based on the put to call ratio. To go long it is best to wait for the put to call ratio to close over 1.0. On the chart below the put to call ratio now updates intraday but it is not always accurate! Intraday reading of the put to call ratio can be found here updated every half hour after the open:

http://www.cboe.com/MktData/default.asp

The more days in a row the put to call ratio prints over 1.0 this the more likely the bottom will be a strong one. The link above shows intraday readings of the P/C ratio.

Also closes on the put to call ratio below 0.50 and sometimes a bit above are indicative of a short term top. Watch the simple moving averages as well because periods of too much buying of puts or calls will almost certainly bring about market bottoms and tops respectively. On the CPC/VIX ratio; this is largely a longer term indicator where investors are likely to make more money on the long side once the short-term 21 day sma has crossed above the 200 day sma. The reverse is true as well. An investor will likely make more money on the short side when the 21 day sma crosses below the 200 day sma:
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DO: try and have an clear idea of what your exit price is when you go in - if it reaches it faster than you expected and you think there's a good chance for it to keep going, sell half!

DON'T - be afraid to go back into a position that you previously lost in.

DO - have a set of rules

DON'T - break your rules - at least try not to, too often (you will eventually break them - if you're human).

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1.Don't Rush to get in a stock, any stock..because you want
to trade something. You don't have to be in the market
all the time. It will happen.

2.Do Read eveything you can get your hands on like..
The Market Makers Edge,Daytrader's Survival Guide, Penny stocks
the next American Gold rush..Norm mentioned: Master Daytrader
a very good one.There are also trading Mags.

3.Don't try to over complicate T/A there are enough
indicators out there to make any stock look good or bad.
For me Simple is better...but learn enough to know the difference.

4. Please don't believe the hype, get to know a few honest traders here on IHUB to follow. There are to many good one's to name. But the goal is to find a few stocks you have faith in
and flip them over and over.

5. Don't give up and enjoy.. you have plenty of time.
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"Plan the play and play the plan".

My biggest don't is "don't hope it will bounce back, just take your loss and come to fight another day".

Last, a little turnips wisdom, if the TA and the FA do not jive, believe the TA.
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Figure out what risk control and money management rules you want to use!! This should be done AFTER you figure out what strategy you're using (breakout vs contrarian, long-term vs short term, etc..)

:

1. Set a maximum amount that you can LOSE on a trade, like 2% of total capital for example. Your individual trade sizes can be larger, but your stops will be tighter as the trade size increases. This is one more suited to an active short-term strategy because it won't tend to tie up your cash.

2. Set a maximum amount that you will allocate PER TRADE (as Zeev said). This means that you don't spend more that 5% of your capital on any position for example. In this example, you could lose your entire position and still be down only 5% on your account. This might be more appropriate for someone who wants to place much wider stops and who is comfortable holding a position at an unrealized loss for a long period of time. One thing to remember: 20 open positions and you're done buying under this method (assuming the 5% figure).

I'm sure there are other risk control methods and examples, but choose one that makes sense for what you're doing.
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think it should be more what percentage of the capital allocated to training, I suggest no more than 5% to any single position....that assures that even a lousy trade with a halt, does not ruin you and leaves you with enough to come and fight another day.
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I say... Always continue to invest and don't give up.

I reccommend papertrading a strategy before putting your money to work. This will lessen the burden of losses, if the play doesn't work.

Also- use trailing stops when your stock goes up. Find a percentage or amount behind the high of the day, and move up with the trend. Don't try to guess the top, and don't feel bad taking a profit under that high- cause what goes up, always corrects (sometimes drastically).

Buy a couple of investment books and read them- use the "advice" that fits your stratey. Throw out the complicated crap. Keep it simple.

Record your buys and sells as they occur. Makes tax time much easier, and you can see your results. I use an excel spreadsheet, and I know others that use a leger. Use whatever works for you.

Never buy a stock based on "hype" alone. Research the company. Minimum- check the filings and PRs for diltution and/or legal problems. Understand the risk before jumping in.

Have a plan for an exit stragety- before you buy the stock. Plan the trade and trade the plan. If the plan fails you, know where that breaking point (Max Pain)is.

Never put all your money on one stock. Keep a little on the side for the next opportunity.


Hope this helps a few folk-



Mankind's most frightening risk is not taking any