Hello everyone,
I am new to the community but not to investing. I have made so many mistakes over the years and most folks probably would have thrown in the towel years ago. So I guess that makes me the village idiot or really determined! LOL
About a year ago I befriended someone on another web site I belong to. Our friendship grew because both of us have similiar interests. He has been daytrading (is there still a term daytrader?) for a few years and has helped me so much. I used to really rely on my "gut" feeling before. Can anyone relate to that?
Well, he pointed me in a few directions and I got to work. There is so much information out there that it made my hed spin. But one thing really intriqued me and that was technical analysis (TA). I loved the idea of looking at the past performance of stocks to try to predict future events of the PPS.
This lead me to create a whole new approach to investing. For the first time, I started to look for entry points and exit points. The entry was the easy part in the past. Just throw some money at it. But that approach was like rolling some dice. I might as well hand my money over. I had no chance! But when I learned how to read candles (still learning) and look at different indicators like the MACD, RSI, SLOW STO, ADX, etc. , my entry points became much more like an attack of the stock when the signs were right. If things were not right, I would just walk away. there is just to much opportunity to stay stuck on a single position, imo.
But that was only half the battle. When do we get out? After all, a profit or loss doesn't occur until we sell, right? Before I get into any trade, I have to know 2 things. What is the support and resistance levels at right now? If all the indicators are saying a buy is in order, how does that relate to where the support and resistance is? I have to have a target price for where I think the stock will go and I use a "mental" stop just in case I am wrong.
In a perfect world, I look for a 3:1 risk to reward ratio or better. Once I find something that will possibly pay me 3 dollars for every one I risk my "spider senses" start to tingle. If everything I just pint out is in line (or most of them), I may pull the trigger on a buy.
After I am in a trade, I am more then happy to take my 3%-5% for a nice gain. I created a spread sheet to look at this type of trading style. I made over 200 trades last year. Does anyone know how much a meager trading account will be worth if we start with $3000 and make just 2% gains on 200 trades including the subtraction of the comissions? I come up with over 18K on my spreadsheet!
So if we can just keep things modest and get 3%-5% on our trades, we can have huge gains for the year! Most people can get 3% on a single trade, right? Well let's keep that in mind when we attack those stocks!
Boca_Bobby
