Short Term Trading Weekend Lounge: 16-18th Mar, page-68

Thanks for making this the topic, Free

This advice is excellent. So thanks peejay.

I've had a dream run in over the last 6-8 months. As I've mentioned on here before, I lost a bundle ($40k+) on IAM when it fell to the ground mid-last year - my capital was almost halved. I had to reevaluate and do some real soul searching - as well as some proper research into trading. I learnt quick not to fall in love with anymore stocks and try hard to never go chasing runners - I'm successful on that front 75% of the time, but once in a while I get sucked back in.. *cough* CKA *cough*. I also learnt a hard lesson in making sure my portfolio is properly diversified.

As a result, I have since made back all losses and then some. But now my struggle is knowing when to sell. Initially - this will sound bad - I went on my "gut" when deciding when to sell and leave the table. This strategy actually worked pretty well for a time. It was more about managing my own fear than anything else, i.e. I didn't want to cop another loss and the psychological victory I felt by seeing my profits rise, even by a little bit, was worth selling at a 40% profit, even if the share went to 200% profit in the end. Eventually though, I built up enough confidence in my own share picking skills that I sat on a few big winners (QUR and LRS both gave me a few bags each). But now this strategy is holding me back a bit - selling KRC at 9.5c just before it exploded to 14c is an example.

Over the last week I've begun to read up more on TA matters. I'm still a bit new to the whole chart reading thing, but thanks to the net and awesome sites that basically do the hard work for you, I've been getting a better idea of when a run looks unsustainable and it's worth cashing out. Of course, this is best used for stocks that I have no real long term hope for, it's more useful for the pumped stocks, or ones I'm just trading in and out of.

My first victory using this method was actually a buy and hold, not a sell. I've been in and out of AVZ for a while now, the last packet I bought was at the 25c level earlier in the week. I was concerned about the lack of momentum but then checked the charts, especially the RSI, stoch RSI and 20 day stoch and begun to see that the uptrend was only half done. So I crossed my fingers and doubled down. By the looks of it that was the right move - though it's not everyday that someone puts in a $2m buy on close! So I guess what I'm saying is that my sell and buy strategies have become more sophisticated in a short period of time. But I agee strongly with peejay's post that all these strategies will depend largely on what you know about the stock and whether you like it from a FA, TA, short-term or long-term perspective.