March 20, 2011

Some Common Problems...

Overtrading- be aware of time and volume in a stock- don’t always think a move is about to happen. Sometimes moves will come at random times of the day like 12:30 but you will see volume to help you know the move is real
• NEVER average down
• Pairing out of your position- in either situation of taking profits or hitting out for a loss. If you are in 400, you should set tier size to 100 shares or 200 shares and hit out based on your own judgment. If you know for certain you are wrong hit out all at once, otherwise wait to get more information
• Hitting out too early and missing the move- don’t be as quick to hit out when you are on the right side of a trade- let the stock work for you more. Just because one bid is getting hit or one offer is being paid doesn’t mean you need to exit the trade immediately. No matter the trade, the stock never looks perfect the
whole time- there are always areas of uncertainty- in this case hit out of some but be quick to buy back in
• Stop constantly flipping back and forth between long and short - if you are doing this it means you have no clue what is going on and no conviction in what you are doing. It’s ok to do it once or twice to get a feel for what is going on, but more than that means you are just guessing.
• When a stock is in a range don’t initiate a position in the middle of the range because it can turn any second. Instead get in at the extremes of the range and add more if it breaks out or something significant happens in the stock to make you think it is an actual move
• Get the best price available in the stock by using either ECN or SDOT- don’t be lazy
• Pay attention to getting the best entry- if you are in from a better price you will be more likely to hold the position longer if it is the right way. This is a result of good timing and patience- don’t overreact to every little thing that happens in the stock and think that it is time to get involved- stay disciplined
• Reevaluate what you are doing wrong after a couple trades in a row do not work out instead of doing the same thing over and over
• Do not get emotional with stocks- if you are wrong just get out and stop doing the same thing thinking that you are right and the stock is wrong

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