Archive for July, 2007
Grab Trading Opportunities Big or Small
July 5, 2007 at 1:51 pm
It’s easy to fall into the rut of trading the same size for every stock across the board, but on occasion you’ll inevitably run across a stock that fits a lot of your criteria but isn’t quite ideal. That’s when the dilemma arises: Do you ignore it or take the trade?
Volume is a key ingredient to me when I’m considering trades. Not only do I want the stock to be reflecting some level of interest (activity), but I also want to know that I can execute my orders effectively and without too much slippage. Strong volume also tends to mean narrower bid/ask spreads, which means a more competitive market. Naturally, volume is the next thing I look at after the chart. When it seems too light for a trade, my first inclination is to pass on the stock and move on to the next, but that isn’t the best or only option I have.
So in the case of the light-volume-but-bullish-stock, why not pick up a few shares if the chart is good and simply take a smaller position? If it pays off and the chart pattern produces the move you’re expecting, the profits may be slightly smaller but it’s still money in your pocket!
RIMG is a stock I’m currently eyeing which has a nice bullish pattern but trades much lighter volume than I generally prefer. The pullback of the past two weeks off the recent high has created a large bull pennant pattern, and a push up through the upper trend line will confirm the pattern and could free up this stock to head north.
(Click for full-size image, courtesy of TeleChart)
Instead of passing on the trade entirely due to the light volume, simply taking a smaller position in the trade if it goes would still allow room for some profits. Perhaps that will translate into a smaller winner than another trade where I may have a larger position, but as a trader I’m all about seizing opportunities whether large or small.
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
Timothy Sykes: An American Hedge Fund
July 4, 2007 at 3:26 pm
I love to read trading books, so I’m always pleased to have the opportunity to do book reviews when writers offer to send me a copy of their book. Recently I was asked by Timothy Sykes if I would be interested in reading and possibly reviewing his upcoming book, An American Hedge Fund. I obliged, and soon after I found an “uncorrected proof” copy of the book sitting in my mailbox. I was pleasantly surprised to also find a very nice handwritten note by Timothy thanking me and offering an open invitation to contact him regarding any questions I may have. That set the stage for what was to become a very good read.
With a hectic schedule like most of us have, I found occasions to work my way through the book over the course of the last couple of weeks, but as I got to it I found it was a real page-turner. Once I completed it a few days ago, my plans were to post my review this weekend, but when I saw my friend Charles Kirk posted his review yesterday and then Timothy appeared on Fox News today, I figured it was time to stop dragging my feet!
I had seen Timothy on CNBC (he was the first to bring models to the show – nice touch Tim!), in Trader Monthly magazine, and he also stars in Wall Street Warriors on MOJO. He definitely was getting some press, so I was interested to see how he had gotten there.
This was a book I thoroughly enjoyed. In fact, not since Dumb Money have I found a trading author’s sarcastic humor and no-holds-barred honesty regarding his trading decisions, conquests and faults so authentic and compelling. I related to so much of it as a trader, was inspired by his successes, and was reminded of important lessons through his failures. Timothy’s style of writing kept me entertained and intrigued as to what would happen next, plus I kept getting waves of nostalgia whenever he’d mention flash-in-the-pan stocks of the 4-letter variety which I’d also traded in recent years. It can be fun to dabble in the story stock of the day, and fading those moves in micro-cap stocks just happens to be Timothy’s specialty as a trader – he’s the first I’ve known to do so well with such a strategy.
Timothy’s story takes you through the complete transition from his $12,000 bar mitzvah money all the way to his multi-million dollar Cilantro hedge fund, chock full of juicy details along the way. The P&L numbers keep on getting bigger, and he keeps nothing in reserve when it comes to his feelings after each individual victory or defeat. You’ll relate as I did not only to the highs and lows of his trading, but to the calculated (and sometimes uncalculated) risks he takes, the disciplines he learns to employ, the pain his weaknesses occasionally cause, and even the burnout he sometimes encounters.
His audited returns are certainly impressive, but he gives the reader a very clear glimpse of just what it takes to get there. Timothy details the lifestyle of a big-city trader, the journey of building a hedge fund when you’re a small fish, how to adapt to changing markets, and how to deal with the everyday challenges and thrills of just being an active trader.
Even though my copy of it was free, I found An American Hedge Fund to be an excellent book which has a lot to offer any self-driven investor or trader. Watch for it in stores or at Amazon October 1st this fall and pick up a copy for an entertaining read!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
Uptick Rule Ends, Short Selling Gets Easier
July 3, 2007 at 9:21 pm
For those who have not already heard, the SEC has voted to remove the “short sale tick test”, Rule 17 CFR 240.10a-1 for all equity securities. Effective Friday, July 6, traders will be able to short all securities on an up, down, or zero tick.
WOW! All these years of having to wait for an uptick to grab a trade on the short side has finally resulted in the simple removal of the rule. This means that on Friday, short selling will be just as easy as buying a security, as the uptick rule will no longer apply. Faster fills on shorts will mean less slippage and a greater ability to add exposure on the dark side for those who are willing to trade it.
Up until now, ETF’s have been shortable on downticks, as well as select securities which were a part of the SEC’s short sale tick test. The Regulation SHO pilot program began in May 2005. It suspended all short sale price tests for a select group of over 1,000 equity securities. But now the gates will fling wide open and there will be no restrictions on what you can sell short on downticks other than if your broker has shares available to borrow.
Ironically, we just happen to be in quite a bull market with the NAZ at 52-week highs, so shorting heavily at this point may not be the solution to all your trading problems! Stay selective out there and don’t let a rule change dictate your next move. Stick with the charts and let them determine your course of action. It’s just that now when that calls for shorting a stock, it’ll be easier for you!
For more info regarding Rule 17 CFR 240.10a-1 and the SEC’s proposal to remove the rule, visit the following links:
http://www.sec.gov/news/speech/2006/spch120406ccc-10a.htm
http://www.sec.gov/news/press/2007/2007-114.htm
Trade with Discipline!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
Holiday-Shortened Trading Week
July 1, 2007 at 10:13 pm
The trading ranges are still intact for the major averages, and we have a holiday-shortened trading week this week with the market open until 1pm ET Tuesday and then closed through Wednesday. That could keep the volume light and conditions choppy, so keep that in mind if you’re trading these next couple of days and consider shortening your timeframes.
Be sure to check out this week’s Market View page over at TheStockBandit.com for a closer look at the indexes before you start your trading week.
Trade well this week!
Jeff White
President, The Stock Bandit, Inc.
Swing Trading & Day Trading Service
www.TheStockBandit.com
[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]
