Short Term Trading Weekly thread week starting: 20th Mar

Originally posted by sharks37 ↑

Interesting discussion about the drive to find the next hot sector and how its done.

Is it a bad thing if someone like SGB champions a new sector he believes will be hot? If he truly was the one who first picked up on the Cobalt wave I wasn't reading the STT thread regularly enough at the time to know) then I would say he's worth paying attention to when he gets excited about something (I'm assuming he's a he). I understand that to be a champion of a cause requires someone to put themselves out there and push ahead with belief when nobody else is paying atention and they can actually appear to be a nuisance at the time but in hindsight we thank them for shaking us all up and making us paying attention. On the other hand, to champion a cause you can get your message across more effectively if you saturate people with your message which can and does turn people off or cause them to tune out.

The drive to find the hot new sector is an interesting question in itself. Of course the driver behind that search is to find stocks that have unrecognised multi-bagger potential. The STT crew collectively have shown you are very good at picking up on the next wave early - and as a result have attracted a growing readership and contributorship, which no doubt creates a snowball effect.

But find the next hot sector has its issues (imo). They include:

1. The time risk associated with getting set early before the wave starts. The risk here is it may take much longer for the wave to start than expected, causing opportunity cost of money sitting in stock not going anywhere while they continue their basing pattern (and in fact the sector may never take off).

2. For the followers, there is capital risk if getting on board once the wave starts - not knowing how high and how quick that wave will be, and how quicky it may fall back.

3. The pressure associated with searching for that next wave, or getting on board once it starts, all while keeping an eye for the next wave even while the current one gets going. The pressure I imagine is particularly high if trading full time for a living.

4. The skillset associated with researching to find the next wave, sorting out which stocks are the best ones, etc. Not all of us have that skillset or dedication/perserverence for that kind of reasearch.

So I applaud from the sidelines as I watch in awe as you guys do your stuff and generate winner after winner. But it looks more and more like a team effort from the STT, different members contributing in different ways.

I say in awe because for reasons 1-4 that I listed, I decided catching hot sectors isn't for me, because it doesn't match my skillset or psyche. Personally for me its about honing my trading skill - whether stocks or forex - and trade markets I know repetitively not making gains primarily from a research skillset, but primarily from a trading execution skillset. Hence why I, and presumably many other readers, are grateful for the great work shared here which highights possible new stocks or sectors to turn our attention to for new ideas.

Cheers, Sharks.

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To be clear the issue wasn't with someone flagging a good stock, or sector or even next hot sector with some enthusiasm, it was the continual constant never ending spamming of one sector which to me started to turn the STT thread into a bit of the DT thread.

@Freehold has worked hard to make this place great and I think the best thing we can all do is share ideas and thoughts and have discussion but not get hung up on one stock, sector or idea because as well all know the market loves to rotate from stock to stock, sector to sector and idea to idea