Hi Malaga & @espiaz,
Apologies in advance for the long winded reply.
I guess we have our own methods that work because I almost go the complete opposite to you for short term trades and have been doing fairly well since I found my groove. I can always do with further improvement and have a lot to yet learn so will also keep your comments in mind as I do for just about everything I read if I can remember. I will admit I have had a few stocks fall to over 50-60% down including two I currently hold but I had a momentary lapse of reason when I knew it was time to sell, holding on to the hope, maybe fell in love with the story & the stock, a screw up really but in saying that one of those jumped 30+% then 20+% over a two day period and is holding well pending next news at which time the price should be at least back to my break even, only causing lost time, not lost cash, although maybe I could be making something elsewhere, but maybe I could be losing as well, especially when I probably know the stock I'm on a lot better than the newer stock.
Risk management I find to be more important than a predetermined stop loss, but I do have my days free to constantly follow the market if need be. I believe due to the changing nature of spec stocks and the effect that hype and fomo and more importantly fear can have on the price in the short term it is important to stay fluid in the decision making process, as what may not be achievable today may be more than achievable tomorrow, if things look to be turning pear shaped I may sell immediately before any loss, I'd rather base my decision on current details rather than just leaving it up to the stop loss while taking my eye off the stock.
As we all know, large drops and jumps are common in specs, a short term (day) drop of even 30% can easily recover the required 43% on the next announcement. I think the strategy also needs to be changed depending on the current overall market sentiment, when the market was bearish early to mid last year I lost quite a bit of money exiting at around firstly the 10, then 15 and even the 20% loss mark. I would pick a stock and it would fall 10% so I'd then sell in an attempt to preserve capital which is what everyone was saying to do, when all I had in fact done was gone backward by 10%, granted that if I continued to hold the price may have also fallen further but I will cut it short if fundamentals turn sour, e.g, no announcement in the short term, cash running low, prospect dusted etc and also when technicals point to a continued downtrend. I try to research as far as practical without spending days on it and prefer to trade on long term fundamentals even if I am just chasing a short term trade, then if the stock does go backward and continues to fall catching me out there is a good chance it will rebound, I don't really have a limit to the time I could leave a stock to wait for it to rise although I wouldn't be holding in the first place unless their were catalysts expected in the shorter term. There needs to also be some understanding of company asset value versus M/C and whether it is over bought or oversold. Technical indicators while easier and quicker to determine only give a value relative to previous price movements, volume & cash flow direction & momentum. Whether the previous price movements have kept the M/C accurate or whether it was ever accurate is always arguable and is really up to the market to determine as a collective which way the price will go.
Prior to placing any order I also check technicals, Stot at 21,7,7 or 5,3,3 or will play around until I manage to line up the historic share price movement versus the stot oscillations/positions, I also watch MACD, MFI, MO, RSI, SMA 200/50 SMA 100 & 14 & EMA 100, as well as market depth, volume movements for a period to determine if bots are running and whether they are selling down slowly or buying up, I also look at where pumps occurred and whether the selling has finished or slowed and also if there are still a high number of sell orders around the value of the previous high or if the sell order continually gets refilled as it is sold, and the rate and price at which the automated selling or buying occurs.
I think from what I can see is that serious traders/pros/brokers don't place sell orders until a set price is reached then the orders are still fed in slowly based on an algorithm set to hopefully minimise share price falling during the sell down, often pumping it slightly in the morning to lift price only to then start selling, pulling the price down by the afternoon, working on average prices to obtain their set profit goal. It seems to me most retail day traders after buying simply throw their sell order/s into their determined sell price/s which creates a larger sell side and damages the stock momentum, I've often seen stock flying only to hit a large traders wall and slow or reverse, I've sat and wondered why they didnt let the momentum build further before placing their sell orders, but I guess we all manage risk in our own way, I guess they fear missing their sale but this regularly happens anyway as the price generally falls due to the larger number of sell orders leaving most of the higher sell orders unfilled.
I also check for most recent few credit raises, and who holds the stock, whether they may be looking for a quick pump and exit or staying for the long run.
I don't use stop losses ever but I keep a daily watch on all my stocks.
Whether or not I will place a lower order or just straight up buy depends on the companies short term prospects/catalysts. I have had wins doing both but have also missed one that I could have made a lot on if I just went up that extra .1 of a cent, I guess I got the charts wrong which are difficult to interpret when dealing with stocks at the 0.004 mark that have had little volume over the most recent months.
It also pays to keep in mind the pros will trade off Stot crossover values generally below 25 for a buy or below 80 for sell, and SMA 200/50 crossovers and to a lesser extent MACD which I think will usually cross over after the Stot has already signaled a change, MFI being above 50 or on way up and very close to the 50 as well as MO to be rising. There are a lot of reasons why a stock will keep falling, the worst of which is no reason at all, but your charts should give an idea of what is happening. As well as indicators candlestick patterns are valuable in determining trends and guessing expected movements. This is what I have found to be the hardest part, recognising the patterns and whether they will be fulfilled. refer attached basic patterns, although there are lots more out there on the interweb for all to see.
A good understanding of charting and interpretation of technicals I believe will lead to better choices for both buy and sell price.
One last thing, I read here in one of the trading rules/guides to sell at least some profit at 100%, I have followed this twice only to lose out when the price continued to rise, I now do not choose an exit amount that is stringent although I always have an idea where I think it will end up but will now continue to hold my entire holding while constantly calculating expected market movement. If I'm 100 or 200% up there is very little chance of falling below cost but would likely sell if it fell further than 50 to 63%max, from there it is very easy to drop that last 37 to 50% in one or maybe two down days only to find that you are now falling toward or past a loss, but then it could also go back up. Here we go, once again technicals and expected catalysts rule the day when needing to make a choice, unless you've got a crystal ball. By holding through a period of a year one several of my stocks now I have CLA up 700%, BOT up 165%, LPD up around 200%, and WFE currently at 460%. My two major falls thsat I shouldn't have let go have been SYA and PLS, I averaged up on both of these which I don't think I'll do again, especially not during a period of fomo at a premium price. SYA was up about 300or400% and PLS over 100%, they are now back to 94% SYA and 53% PLS, I do have confidence that these will both go back up but should have sold at their high and bought them back.
I hope you can make sense of my thoughts and opinion and do apologise if would love to hear any other views or if someone can see a major fault in some of what I am doing please let me know, even though I may not agree.
Saturday night, party or more research until 5 in the morning, hard choice, maybe a bit of both, I think I have an addiction. I've become fixated on what I'm doing, staring at a screen, sometimes for 20 odd hours, actually 3 days straight last week with only a nap in between, once I start to fall off my chair and my head hits the bench a few times I will usually call it quits, or get something to eat, it's a good thing my chair has arm rests or I'd probably just fall off sideways onto the floor. From 9am through to 5am should just about do it I recon. Pity it's all just a mush and all the companies have blended into one, unable to remember which is doing what and when, constantly checking their news/announcements to refresh on who is doing what. I probably need to get a ready reconer together to more easily follow the quantity of stocks I've researched, probably been a fair few hundred over the last year, I do have a handle all stocks I hold, there's only currently about 16 from memory.
Peace out people, & i hope you all enjoy the rest of the weekend.
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