A Brief Look Into My Trading Mentality and Strategy

Sep 30, 2007 -

Personally, I’d rather hold two long term trades making 50% profit at the end of the year than scalping thirty trades throughout the year and making the same profit at the end of the year. Don’t get me wrong, both result in positive gains and in either result most people would call it a great year.

But, there will be some days when I don’t have access to a laptop or computer during market hours (at least until I get my laptop in the mail). If I start trading shorter time frames, I’ll end up missing an entry or maybe making a decent exit. But I also understand that not every trade can withstand two months+ of market volatility. There are many stocks that rally for a month and then spiral out of control. In that sense, I won’t be just buying it and then forgetting about it for a year or two.

My goal is to ride the stocks that have been going up consistently for at least three months and to use either a 20 or 50 day moving average as a trailing stop. If the trend breaks then I’ll take my position out of the market and move on.

Aside from the previously mentioned, as many of you know, there are opportunities to make money in the short run also. If I see a trade that looks like it will be going up in the short term (a couple of days to 2 months) with low risk (risk is determined by the stop ), I will initiate a position. In order for me to be successful with this strategy, I will have to know that I will have access to a computer during the period in which I will have to monitor the stock closely. I don’t like setting actual stops with my broker because there will be times when the stop is briefly hit, but at the end of the day the stock finishes up for the day.

This short term strategy will enable me to more readily adapt to market conditions. Also trading in the short term will give me a better idea and the feel for current markets situations. To keep this strategy separate from the other strategy, I will keep a journal recording the approaches to particular trades.

I've hit somewhat of a rut in terms of improving my trading, maybe you guys can give me insight as to how you guys continue to improve your trading either mentally or technically speaking.

2 comments :

Nick M. H. said...

Kevin,

So far, your strategy seems sound and correct. One aspect that I would like to mention that is important to any strategy is buying at the correct buy-point. I believe that this is the best way to make a trade low risk (even more so than a stop-loss). If you buy a stock at the current buy point, you can easily sell the stock if it doesn't act well and you will be significantly minimizing your potential loss.

Your idea of keeping a journal is a good one. In addition to my blog, I also keep another journal, which goes into my trades and strategy in more detail. If there is one piece of advice that I can give you it's this: Although you may feel like your stuck in a rut, do not give up. Continue to learn and practice your trading and keep working on your strategy. One of the keys to becoming a successful trader (or anything else in life in general) is perseverance. If your heart and mind is really in it, never give up. Also, concentrate on past winning stocks TNH, DRYS, and JRJC. History (and chart patterns) always repeat themselves and studying these stocks and what made them winners will help you find the markets next big winner. Best of luck!

-Nick

Kevin Hsu said...

Nick,

Thank you so much for the advice. I do agree with you that a correct entry/ buy point is important as well.

I will take your advice about concentrating on past winners and not giving up to heart. Thanks for reading!

 
Copyright © 2007- StockKevin. Disclaimer. All Rights Reserved.