Glum Swing Trader - Was Doing Great Until a Couple Weeks Ago

[Glum Swing Trader - Was Doing Great Until a Couple Weeks Ago]

Bobcollett talked about a 20 day average true range. Check out the work that Charles LeBeau has done on chandelier exits using an exponential ATR. That sets your stop loss based on the volatility of the stock you are purchasing.

 

In addition, you might want to watch different time frames to see what the overall movement is, and be watching some market averages to see when we are getting either a reversal, or into a trade range.

[My 1st Stock Trade!]

Hi everyone,

 

I've decide to become an active trader. For the past months, I have been aggressively been studying stock charts. After feeling good about producing profits in my virtual account, I now feel comfortable to jump right into the real thing. So my question is: What's going on with the housing industry? I've been following the industry for the last 3 or so months. For the past couple weeks I have watch many housing companies post their earnings. Almost every company has reported quarterly losses. However according to their charts for the past 90 days, it seems many of those company have been uptrending. Is this a possible bounce? I bought BZH a few days ago because I think these companies are bouncing and headed upward.

For those who are experienced, please tell me if I'm on the right track and if have the mindset/criteria/research method of becoming an experienced trader such as yourself?

 

I wish you well in your venture. Personally, I wouldn't touch day trading with a 20 foot pole, although there are day traders who make money. I actually met one the other day; he also trades options.

 

But to your question: I am not trading anything to do with the housing industry, but from another perspective, here goes: listening carefully to a number of people (in mortgages, real estate sales, banking) I keep hearing that the banks are sitting on an unknown, but presumed large number of homes which they could foreclose but have chosen not to, for the simple reason that the market is already up to its gills in foreclosures. Add to that fact that the next round of forclosable properties is either here or just around the corner (balloons coming due), the state of unemployment and under-employment, and I keep hearing that it may take until 2013 - 2014 to clear all of it out of the system.

 

It is not that no new homes are being built, or that none are being sold, but rather that builders were sitting on inventory - built homes, partially developed property, and bare land - that was priced when the market was overheated, and the reductions in value still have not been absorbed completely. Can any of the big ones make money? What I have seen locally is tremendous reductions in staff, bankruptcies, and buyouts (e.g. Centex, now part of Pulte). How do you make money when the debt yo are carrying is greater than the sales to service the debt? that, in turn, flows out to all the suppliers, and etc. and etc.

 

And the home builders are not just competing against one another; they are also competing against any homeowner, for reasons other than foreclosure, who wants to sell their home. I am not the least surprised that there were losses; how to explain the increase before? Not everything happens on the news, and not all the news is entirely accurate or complete. And not all professional investors/traders make the right decisions. The market will do what it will do, and we have a plethora of people who have opinions about why it did it or what it will do next. Their collective advice and something under $3.00 will generally get you a ride on the local transit.

 

Just as a point of curiosity, why day trading instead of swing or position trading? Patience?

[Stops Yes or No?]

Hi,

 

Ive been searching the forum for a difinitive answer, and the fact that I can't find one is probably all the answer I need.

 

It seems that sometimes a trade gets stopped out, and then the price goes back to where you where expecting it to go when you entered.

 

The question is: Are professional traders just taking your shares cheap, or Is that really just the way the market moved that day?

 

If the pros are just taking your shares cheap is that considered part of the risk of trading? You just set your stop and hope they don't bother with it that day. The lack of any concern from this forum tells me not to worry about it. I would like to know what your opinion is of this practice, if it actually exist, and what can be done about it,.

 

Thanks

Bill

I am assuming you are talking about stop losses. There seem to be all sorts of opinions as to where to place stop losses, and I have read numerous comments that too many traders place them a specific percentage away, or a specific amount away, and tend to get stopped out easily. whether it is specific action by certain individuals "hunting" stops, or jsut the normal action of the market due to various strategies, when you are out, you are just as out no matter the cause (hunter or otherwise).

 

I believe it is Charles LeBeau who recommends a 3x Exponential ATR stop as a chandelier stop. Those, too will get stopped out, but the original stop (placed at time of purchase) is used to protect capital and to provide the figuring point for how much to purchase, and the traveling stop, once you are in profit, is to protect profit, act as a selling stop if there is a reversal, and cover you if you do not have a specific sell target.

 

I saw one program (which escapes me now) where they used a 4 ATR stop consistently (which of course limits even more the size of purchase).

 

It may be that you are placing the stop too close; increasing the amount of ATR may reduce the number of times you are stopped out. However, it also limits the size of purchase. On the other hand, it may let you run longer without having to re-group and purchase back in. As they keep saying, there is no Holy Grail.