re: blueballs
Splitview you ask how can a downtrend ever be stopped if people never bought.
Well fortunately people do and for a number of different reasons due to their own trading styles.
EG somebody who uses fundamental analaysis sees what they determine to be value so they buy.
Others but because the stock is worth less than it was the day before so in their simple thinking the stock is a better buy because its price is cheaper.
Thirdly a lot of technical analysts will buy stocks when they hit support lines or bounce of downtrend lines.
Sure all those methods work at times...but from what Ive seen and tried none of those methods are very profitable ...eg they work less times than they dont work meaning the odds are not in favour.
Back to your first question...well in theory what you say sounds great. Unfortunately prolly only 5% of the market at maximum rises 500% of the year....
Letting winners run is a great trading philosophy though...but i think putting a set percentage on your gains is not a wise idea...you should take whatever the market will give you...you may end up with 1000% or even more.
Along with this though you must have a stop loss...be it at purchase price or a trailing stop imo.
What if your stock gets to 495% then starts falling and never meets your %500 target...many of those that rise that fast also go under...look at the bitech dot com and telco sector...there are examples everywhere.
To buy a stock and "hope" it will rise many multiples is what most traders do when they purchase primarily..."hope" is not a good word for a trader. Those who hold LUM from higher prices would have been hoping for a 500% return...I would think the majority are holding LUM at a loss now.
Every stock I buy I try not to put a price target on...easier said than done though of course. I remember not so long ago when lum ran from 30c to 40c many people sold as they thought it had risen too high...Lum rose another 250% from there.
Remember if you but a stock and it falls 50%...it will then have to rise 100% for you to get your money back.
I understand what your getting at but unfortunately I dont know anybody or have heard of anybody that has ever traded succesfully that way...not saying it cant be done but i feel that it would be near impossible for it to happen...you must have the odds in your favour at all times.
The trick is to buy stocks in sectors that the market has difficulty placing value on...eg biotech new technology or miners etc...now you must wait for everything to line up beautifully for these stocks. Usually you need a very good chart and a few good rumours. Then you are putting yourself in with a good chance of making a good %. You must use some sort of running stop loss though or you are pretty much doomed to failure.
Your theory could be used on the race track...but think how it would work...for starters to get a horse that pays 500% you need to pick an outsider...you then have more risk attached and a greater chance of losing money. Then think how often the outsider actually wins...not that often...thats why you are given those odds. What if you bet on 10 outsiders and none of them win...the odds are they wont...well there goes your money.
it is very common for traders to get on losing streaks no matter how good their past record is. You can trade 20 times in a row and do nothing wrong and the next day you start trading 20 more stocks and cant do anything right. When your winning streak is going your confidence is up and this is a good time to increase trade size imo and when your on a losing streak its a good idea to reduce trade size and frequency until you build up your confidence again.
There is nothing to say you wont pick 100 stocks wrong in a row...its the same as saying that if red comes up on a roulette table 100 times the odds are that black will come up the next time.Your odds are still 50/50.
Anyway prolly went off track a bit there but hope it helped.
LUM Price at posting:
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