Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[Mr_Tomahawk]

LCLP was guuud today.

[lewdog]

AAPL moved nicely today. Always nice to swing trade the blue chip companies. A lot less risk, when the entry is good, than growth stocks.

[Coogs]

Originally Posted by lewdog

WWE made a move today. I got in 58.20.

Okay. So you have a stop order of 2.7%.

Since the high for the day was 59.53, does this mean that your 'floor" stop order price is now 57.92? Which would mean your potential loss would be 0.5% at most?

[lewdog]

Originally Posted by Coogs

Okay. So you have a stop order of 2.7%.

Since the high for the day was 59.53, does this mean that your 'floor" stop order price is now 57.92? Which would mean your potential loss would be 0.5% at most?

The initial stop I set is a hard stop set at a certain price determined by the stocks recent low's before a possible trade initiation. In this case the buy price was 58.20 and the initial stop was set at 56.60 for 2.7% risk. This stop is raised if the stock continues to go up but is then determined by it's new movement, and many times set at intraday low's, so the percentage only matters for initiating the trade. It has no meaning after the stock moves up as the goal is to maintain capital and decrease downside risk. Today the intraday low was 56.98. Instead of targeting the exact intraday low I take that price and multiply it by .999 to set my new stop loss right below the intraday low. So this would be 56.98 x .999 = 56.92. I am now at 2.2% risk compared to my purchase price.

If you can build in capital risk management strategies by using defined rules, with a win/loss ratio of 2:1 (8% winners, 4% losers on average), this system still provides profit even if you're only 50% accurate in your trades. It's called "built in failure." This also only works if you track every trade so you know how successful you are doing in your trading. Most investors subconsciously lie to themselves about how successful they are at "winning" trades.

When the market was whip-sawing in March-April, many of my trades were 3-4% winners, while I was able to tighten up my stop losses to 1.6-2%. I was still able to maintain a 2:1 ratio of winners to losers and made profit even though my trading winning percentage was only 47% those months.

[Coogs]

Originally Posted by lewdog

The initial stop I set is a hard stop set at a certain price determined by the stocks recent low's before a possible trade initiation. In this case the buy price was 58.20 and the initial stop was set at 56.60 for 2.7% risk. This stop is raised if the stock continues to go up but is then determined by it's new movement, and many times set at intraday low's, so the percentage only matters for initiating the trade. It has no meaning after the stock moves up as the goal is to maintain capital and decrease downside risk. Today the intraday low was 56.98. Instead of targeting the exact intraday low I take that price and multiply it by .999 to set my new stop loss right below the intraday low. So this would be 56.98 x .999 = 56.92. I am now at 2.2% risk compared to my purchase price.

If you can build in capital risk management strategies by using defined rules, with a win/loss ratio of 2:1 (8% winners, 4% losers on average), this system still provides profit even if you're only 50% accurate in your trades. It's called "built in failure." This also only works if you track every trade so you know how successful you are doing in your trading. Most investors subconsciously lie to themselves about how successful they are at "winning" trades.

When the market was whip-sawing in March-April, many of my trades were 3-4% winners, while I was able to tighten up my stop losses to 1.6-2%. I was still able to maintain a 2:1 ratio of winners to losers and made profit even though my trading winning percentage was only 47% those months.

Gotcha. Thanks for the explanation.

[scho63]

Originally Posted by lewdog

The initial stop I set is a hard stop set at a certain price determined by the stocks recent low's before a possible trade initiation. In this case the buy price was 58.20 and the initial stop was set at 56.60 for 2.7% risk. This stop is raised if the stock continues to go up but is then determined by it's new movement, and many times set at intraday low's, so the percentage only matters for initiating the trade.

Everyone evaluates or handles different but how do YOU handle stocks that are going to GAP down on the open, usually due to bad news like missed earnings or scandal?

[lewdog]

Originally Posted by scho63

Everyone evaluates or handles different but how do YOU handle stocks that are going to GAP down on the open, usually due to bad news like missed earnings or scandal?

Gap downs are pretty rare when you're trading stocks on breakout but they CAN happen. You'll find many gap downs happen on stocks that have recently retraced and many think it's now a "buy cheap" type deal when in fact it's just a stock that wants to keep sliding.

Since I have good risk management strategies on most of my trades, losing 4% or less on average ALWAYS, if I have a gap down and lose say 10% on a position, it's not ideal but I've done well following my other rules to not make this tank my account.

These rules also help lessen the blow or chance of gap downs.

1. Never put more than 10% of your total account value on a trade.
2. Never hold a stock through an earnings date if you're trading.

[Mr_Tomahawk]

What does this CCIV merger mean that I keep reading about....?

[MTG#10]

Originally Posted by Mr_Tomahawk

What does this CCIV merger mean that I keep reading about....?

Merging with Lucid Motors, old news but supported its finally happening within a month.

[Mr_Tomahawk]

Originally Posted by MTG#10

Merging with Lucid Motors, old news but supported its finally happening within a month.

So boom boom good or boom boom bad if you are still holding a small bag, just in case.

[eDave]

Originally Posted by Mr_Tomahawk

So boom boom good or boom boom bad if you are still holding a small bag, just in case.

It was that merger news that turned it into a meme stock for a while.

[eDave]

Originally Posted by Mr_Tomahawk

So boom boom good or boom boom bad if you are still holding a small bag, just in case.

It was that merger news that turned it into a meme stock for a while. That rumor was already bought. But due to how far back that was, I expect some immediate, short term, growth.

[MTG#10]

Originally Posted by Mr_Tomahawk

So boom boom good or boom boom bad if you are still holding a small bag, just in case.

Lucid will be selling cars soon, they already have multiple production facilities. I think it will easily be a $50+ stock within a year, likely before the end of this year.

[MTG#10]

The way the wash loss rule is enforced makes absolutely zero sense sometimes. I get the need for it, but it's enforced in situations where it shouldn't be.

I bought five different lots of BNGO over the last three months. I sold all five at once a couple weeks ago. The first lot was at a loss, but the rest for profit which total well exceeded the one lot sold at a loss.

Today I decided to buy back in because I think it's going to run again soon, even higher than it did last time. My purchase through Fidelity triggered a wash loss and raised my cost/share enough to immediately put me almost $200 in the hole.

The whole point of the rule is so people cant manipulate stock losses for tax benefits. I couldn't claim the one lot sold at a loss for a tax benefit even if I wanted to because I made so much more on the rest, profiting big overall. But I still got penalized. Am I the only one who thinks this is ridiculous?

[scho63]

Originally Posted by lewdog

Gap downs are pretty rare when you're trading stocks on breakout but they CAN happen. You'll find many gap downs happen on stocks that have recently retraced and many think it's now a "buy cheap" type deal when in fact it's just a stock that wants to keep sliding.

Since I have good risk management strategies on most of my trades, losing 4% or less on average ALWAYS, if I have a gap down and lose say 10% on a position, it's not ideal but I've done well following my other rules to not make this tank my account.

These rules also help lessen the blow or chance of gap downs.

1. Never put more than 10% of your total account value on a trade.
2. Never hold a stock through an earnings date if you're trading.