viphar's qna session with ipod and palz, page-80

OK Viphar - lets talk.

I'm only going to look at two trades PEN and FML

FML:
In 15/9 at 3.5 - sold 15/9 3.7 - good 2 tick daytrade result
In 15/9 at 3.6 - sold 3.9 - v.good result

In 17/9 at 4.5 - sold 4.2 - sad but good use of stop loss. Stock traded that day to a high of 4.7 (I will assume you could of sold at 4.6 given the course of sales on 17/9)
In 17/9 at 4.3 - held.... Currently 3.8 - high of 4.0

Problem: Over trading the same stock in a downtrending spiked price (high 4.7). Already accepted a loss on this share. Should have ended the relationship for this period. Didn't take stop when downtrend continued. Lost in hype. Stock closed at 4.4 on 17/9 - should have sold into close - stick to plan. NEVER NEVER buy more until you have closed your position with your initial trade. NEVER. Stock opened at 4.1 on 18/9 and traded back to 4.3. Take the stop at breakeven. BREAKEVEN IS GOOD! Yoyu can always retrade it! As soon as your head said > this isn't going well, get out. If you get it wrong, take time to reconsider entry. If you don't know where to take a stop - use a $ value of say $600 or two ticks. Also > in the same day .... it is not good practice to buy the same stock above what you sold it at. You're basically bidding against yourself. If you sold at 3.6 in any given day, you should try not to buy above this level.

PEN:
Bought on 10/9 at 6.0 -
Didn't close initial position before re-entering another at 5.7.
Opportunity to stop out for 5.9 after stock went to 5.8 on intial order. Next day stock opened at 5.6 and fell to 5.5 - no stop again. Stock went up to 5.5 two days later - still no stop position. Closed trade on 25/9 at 4.8 for one position. Holding second position. Way out is to sell into strength now at 5.1/5.2 depending on depth volume. Sell, recognise the loss and buy back lower if wanted.

The problem is that you need to take each trade as a separate entity. Close it before taking on any further positions. Never average down. Not worth it. Allow stocks to come to you even if you miss out. Don't chase the stock. I also bought PEN that day at 6.0 after the announcement - only I re-sold at 6.0 when I saw that every time 6.0 was picked up, it was being refilled with more sellers.

Also - don't assume that because the depth at 5.9 is strong that it will be there minutes later. People change their mind and dummy bid. (Look for reductions in lower depth levels when holding positions). (SIGNALS) Later bids sitting at 5.9 were most likely dummies on 10/9. Also reduce your order size for now. As soon as you saw a two point loss at 5.8 you knew you were in trouble (set alarm bells) - you had an opporutnity to sell at 5.9. Instead you bought more at 5.7 without closing your 6.0 position. NEVER DO THIS. (Slap self)

Hope this all makes sense. I might have some of it wrong as I don't know the time you bought, but with PEN it is obvious what went wrong. 6.0 was the high.

Above all else. Learn from the errors. I can tell you that this year I have lost two trades at the $2,000+ level. One was IMU when it opened much lower and I sold into the buy strength bounce. I had left two order in place and both got hit at different levels. Don't do this. One order in a stock at a time on surging stocks. The other was GDN and again this was bad trading on my part. I never stopped at 14 (in at 15.5). Sold at 7.7 on the bad news day. It happens and being whimsical about day trading instead of a business approach is where people are most inclined to fall down. One trick I also do is to sell part positions when I've got it wrong. For example: I bought 400K STI at 1.9 and sold 300K at 1.7. So although my holding statement says I own STI, the qty is VERY SMALL now (100K). I was prepared to hold the rest - that's my plan. I can sell if I want at any time but I can afford to hold this position. I'm currently holding 10 positions. Three are from TODAY (NSL at 3.2, POS at 31 and ERH at 17). ALL will be sold tomorrow. I have already reduced my exposure to PLV, WHN (selling into strength and reduced my holdings) and I hold small positions of < 20K on KEY, AMU. My large trades are all closed within 24 hours. Got it?

Hope this helps and some of it is useful. Not everyone will agree with this, but it works for me and works well. I make money every week (except two in 8 months - IMU and GDN). On that point, Keep your Excel file up to date at the close of EACH business day. Match your buys to your sells in order so you can see what each trade was worth. Total each day and cumulative it each week. Know on any given night how much your exposure is in total $ terms. Mark your holdings in yellow. Partial sales in blue. (SERIOUS - colour code). Know what you have made every day and week to date and for the financial year to date. Priorize your stocks and write down what you need to do the next day. Remember, you're running a business. Good books are vital.

Hope this helps

iPod
BUSINESSMAN