| Today’s Lesson:Don’t get burned! Do you see the Big Picture? |
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Kunal of HelloStockMarket
Contributing Member
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Joined: 02 Feb 2010
Location: Canada
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| Today’s Lesson:Don’t get burned! Do you see the Big Picture? |
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I’m not too sure how many of you ladies and gents trade fulltime. Personally, I like to maintain my positions for a few months rather than flipping new positions every two weeks – that is because I don’t really have a desire to do so, but (more importantly) I work a fulltime job, so I can’t watch the markets move all the time. Consequently, my trading style is to maintain longer-term positions – but basing my trading decisions on the Daily Charts.
If you are thinking, “uhh…. What does that even mean?” Well, let me explain myself:
I refer to Weekly graphs to get an overall big picture of what is happening in the stock. You see, the weekly graphs can help you pick on the primary trend. The primary trend, my friend, is the trend that you want to trade with. That is the Big Train that you want to be aboard.
Now, as a trader (I really don’t like calling myself a “trader” since I usually only make about 2-4 trades a month), I risk manage my position based on a variety of technical indicators. However, the problem comes into using weekly graphs as a way of risk managing – since data is spread out (because you get readings on what has happened in the whole week, rather than what happened in a day). Since I am an option trader, I simply cannot afford to use weekly data as a means of creating my exit or entry points due to the huge spread in the weekly data.
How do you overcome this?
Even though I use weekly graphs to get a big picture of the primary trend, I use the DAILY charts to ride the intermediate trends that follow the primary trend. To make that statement easier to digest: if the primary trend is going up, I will wait until the intermediate trend is going up. Remember, you can have intermediate downtrends (aka pullback/correction) AND uptrends, which together form cycles that occur in the primary trend.
Playing downtrends in an overall uptrend is tough – you have to be quick and nimble, since downtrends can be volatile and short-lived. However, playing the intermediate uptrend in a primary uptrend is the sweet spot.
Lesson for today: Timing is EVERYTHING.
I would rather wait for new cycles to begin rather than jumping onboard an exhausted cycle, or trying to play a counter-move to the primary trend. I’ve finally learned this lesson after being burned one too many times.
Staying on time,
Kunal Kalsani
Starting from scratch? See my blog, HelloStockMarket.com for my Free 5 Day Guide To Building an Awesome Portfolio - from my own experiences.
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Thu Feb 11, 2010 5:37 am |
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oldguy
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quote:
and check my progress of achieving a cool $3k/mth in the stock market (using only safe and conservative strategies)
Umm - you obviously know that $3k/m is only $36,000/yr before taxes? So why is that the goal? Wouldn't $3k/wk be more realistic? 
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Fri Feb 12, 2010 12:41 am |
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samurai
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quote:
Originally posted by oldguy
quote:
and check my progress of achieving a cool $3k/mth in the stock market (using only safe and conservative strategies)
Umm - you obviously know that $3k/m is only $36,000/yr before taxes? So why is that the goal? Wouldn't $3k/wk be more realistic?
Is that possible? And how much capital would you need to reach this amount?
I think someone said that to make a small fortune in the stock market, start with a BIG FORTUNE.
The best way to predict the future is to create it.
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Fri Feb 12, 2010 5:56 am |
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Kunal of HelloStockMarket
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Cash: $ 8.70
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Joined: 02 Feb 2010
Location: Canada
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To be honest ... I don't know. This ISN'T something that I intend on reaching overnight ... it will be a process with a learning curve.
I'm starting with a small amount, and basically, the purpose of the case study is not about making the money, it's about developing a system that can be treated like a business - something that I can reproduce and scale.
I KNOW it won't be perfect (nothing is), but I want to create a system that basically takes out the emotions from a trade. I'm sure you can buy a system, but I want to create my own system that is comfortable to my risk tolerance, and is adaptable to my lifestyle.
The reason why I am starting this case study is because if this IS a new market (ie no longer a bear market) then I have a few years of wealth to be made.
The biggest learning lesson I learned in the bear market was that I have become really good at risk management. I knew all about options, technical analysis etc prior to the bear - however, it's the less talked about concepts like money managment and risk management that are crucial to your success.
I think that comes in part of the mindset component when you feel confident in your abilities, but just need the final step to really catapult you in the right direction.
It just feels right, I guess.
Starting from scratch? See my blog, HelloStockMarket.com for my Free 5 Day Guide To Building an Awesome Portfolio - from my own experiences.
Last edited by Kunal of HelloStockMarket on Fri Feb 12, 2010 6:15 am; edited 1 time in total |
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Fri Feb 12, 2010 6:13 am |
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