Author Archive for Jeff White

One Year Ago This Week – April 2006

April 14, 2007 at 4:56 pm

Here’s a handful of posts in case you missed them from one year ago this week:

Don’t say these 5 Expensive Words! They rarely pay off, and yet we’ve all said them at times…

Is it time to Check Your Rolex? Deciding which kind of trader you should be depends on your timeframe as much as it does your personality.

At TheStockBandit.com, we’re still honored to have Received This Award. While S&C magazine will not award it twice to the same service, it was sure nice to be recognized as the #1 Advisory Service by a leading publication.

Enjoy your weekend!

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]

Tips for Finding Day Trading Candidates

April 12, 2007 at 8:52 am

With more traders taking a shortened timeframe in recent months, discussions are turning to just what makes for a good day trading (or scalping) candidate. Some scalpers have a handful of stocks they exclusively trade, but if you don’t, here’s a checklist to run when looking for trades to catch a piece of the action:

Trade Stocks With Volatility

Check to be sure that stocks you’re considering for day trades tend to move a lot each day. Average True Range (ATR) is a common way to gauge movement, and many charting programs will allow you to scan for this. A stock which fluctuates plenty each day will offer lots of potential for scalping, so make this a requirement.

Trade Stocks With Momentum

Whether they’re in the news or just making big waves in the market, stocks with momentum are the go-to day trading stocks. Pure day traders are willing to go long or short, so the momentum factor is applied for both directions. Recently the solar-related stocks and biotechs have been in play on the long side, while homebuilding stocks and mortgage-related stocks have been day trader favorites on the short side.

Trade Stocks With High Volume

High daily volume levels make it much easier to dart in and out of stocks with minimal slippage. Numerous orders resting at each price level or plenty of shares showing in your market depth window are what you’ll want to watch for. Because day trading usually means frequenting the same stocks multiple times during the day, making sure that the liquidity is there can prevent getting stuck in a trade without a smooth exit.

One other note is that when you find a stock which has already broken out and you’re too late for swing trading it, the odds are high that some money can still be squeezed out of it on a day trading timeframe. Use the criteria above to be sure it passes the test, and then hit it for a few dimes!

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]

Beware the Double Whammy!

April 11, 2007 at 8:24 am

Recovery plays are always higher-risk, and while a stock may be closer to $0 than it once was, it can still fall 100% from your entry level. However, there still seems to be some appeal to traders and investors in search of “a good deal.” Be sure you know what you’re getting into when that’s your aim, because as one stock just proved, cheap stocks often get cheaper!

As a trader, I pay very close attention to the recent history of a stock’s behavior. Sure, there are occasional surprises, but stocks which make steady moves tend to keep doing the same. And stocks which have a history of large price gaps are usually prone to more big gaps in the future.

Take ADLR for example. Back in September, the stock lost 52% overnight! Then it cratered again in November, losing 39% overnight. Ouch!

(Click for full size.) Chart Courtesy of TeleChart.

But it gets worse….

On Tuesday of this week, the stock did virtually the same thing. After closing on Monday at 8.72, it shed 56% overnight.

(Click for full size.) Chart Courtesy of TeleChart.

The lesson here is to avoid stocks with an ugly history! If you dare venture into a stock hoping for a recovery, consider taking a smaller sized position because these rebound plays are far more speculative and you’ll want a lot less of them in the event of a disaster.

Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com

[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]

Gap Lessons: When Trades Get Lucky

April 10, 2007 at 9:21 am

I’ll never forget when it happened. I had been swing trading the stock regularly, and it had been very good to me in the weeks leading up to the big gap. I was sticking and moving, making a few points here and there, and my account was getting bigger because of it.

And then came January 3rd, 2000. Emulex (ELX) gapped up a whopping 47.5%. It was completely huge, and I was stunned. I had never caught a gap so large, and I was instantly frozen in disbelief and excitement. “This stock is headed to the moon, and today must be the day,” I thought.

Or was it??

Soon after it opened, it marked the high of the session roughly up $29 (just about $2 higher than the opening level), and soon worked its way lower to finish positive by only about $7. BUT, I got lucky three times that day…

The first way I was lucky was that it gapped higher to begin with.

The second way I was lucky was that I panicked and sold after it started falling like a rock, getting out well above the closing price.

The third way I was lucky was that I learned a valuable lesson: TAKE THE MARKET’S GIFTS!

Times Have Changed – Slightly

The gaps aren’t as big these days because the market’s not as volatile, but gifts still come from the market and you just might get one if you’re lucky. When it happens for you, keep a couple of things in mind:

* It’s alright to sell at least SOME of your shares. Too many investors and traders think they must be in a full position or close the trade completely. But with commissions so inexpensive these days, it can really pay to make partial sales and pay the commissions for multiple exits. Why not lighten up your exposure and make some of those gains real?

* The professionals are probably selling. Market makers and fund traders love to flip shares into strength, knowing they will be able to reload at lower prices after the euphoria wears off and the little guys stop buying. They are the big dogs that can really move the markets, so follow their lead and use your agility to book profits when the getting is good.

* Regret is a loser’s game. Too many individual investors and traders see a big gain start to disappear, and they quickly resolve to exit the trade once it returns to its high-water mark. When it continues to sink lower and lower, regret sets in like a millstone around their necks and prevents them from bailing out while they still can. Don’t let regret dictate your decisions. Use your head – making logical decisions under the gun can mean the difference between failure and survival in the market, so don’t get greedy or you’ll regret it. The idea is to compound your money, not your mistakes!

Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com

[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]

Grandmas, Ferraris and Big Profits

April 9, 2007 at 9:21 pm

This week’s Free Newsletter over at TheStockBandit.com discusses the topic of how Wider Stops Can Mean Huge Rewards in trading. It’s not always easy to give stocks plenty of room to move, but it can pay off huge – especially when you’re trading the volatile momentum stocks.

TSL is a stock we just caught a great move in, so stop by to read this week’s free newsletter to find out how we caught it and how we stayed in. And once you’re there, the title of this post will make a LOT more sense – I promise!

By the way, you can sign up for the free newsletter on the Free Newsletter page at TheStockBandit.com and we’ll notify you every time one is published. An opt-in form is provided at the top of the page which puts you in full control of your email subscription at all times.

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]

Trading Plans & Self-Honesty

April 2, 2007 at 10:13 am

This week’s Free Newsletter over at TheStockBandit.com discusses the topic of Trading Plans & Self-Honesty in trading. It’s hard to argue that knowing yourself is the first step towards developing the right trading plan.

Our strengths and weaknesses must all be evaluated when it comes to devising the proper plan for our own trading, so stop by to read this week’s free newsletter for my thoughts on the topic.

By the way, you can sign up for the free newsletter on the Free Newsletter page at TheStockBandit.com and we’ll notify you every time one is published. An opt-in form is provided at the top of the page which puts you in full control of your email subscription at all times.

Trade well this week!

Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com

[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]

Trading Responsibly

March 27, 2007 at 8:23 pm

You’re not the only trader who falls into bad habits from time to time. Sure, we all will occasionally blow a stop when we get a little overconfident, but I’m not even referring to those kinds of habits….. I’m talking about the ones outside the actual process of trading.

Irresponsible trading is in many ways a byproduct of choices we make outside of market hours. One very common way to trade irresponsibly is by failing to do your homework. However, even worse is when you are not keeping close enough tabs on your trading account.

It’s real easy to view account statements and print out daily P&L sheets when trading is going well, isn’t it? After all, every one of us likes to see the progress we’re making – whether it’s reducing our waistline or fattening up our trading accounts!

So here’s a simple tip that will help your trading: Print your daily P&L sheets!

My broker has an “Intraday View” which I print from the Portfolio Manager, and it breaks down all kinds of stats on the day’s trades. Included are such things as Total P&L, Commissions, Longs vs. shorts, and Biggest Gain & Biggest Loss. Just taking a look at basic stats like these takes about 30 seconds of my day. When the closing bell rings, I hit the print button and it’s right in front of me. But the benefits run deeper than just the superficial numbers.

One of the most important parts of the sheet I print out is the stats on my account. At a glance, I can see my account’s Starting Net Worth on the day, Net Worth Change today, and the current Net Worth on the account, along with the day’s P&L numbers. Having a hard copy of these stats in my hand each day makes the numbers seem a little bit more real, believe it or not. Punching holes in it and filing it into a binder is just part of my post-market routine, and it helps me keep close tabs on my progress.

It’s easy for me to flip back in the binder and see where I was in the past, whether a week or a month ago. But what I really like is that by forcing myself to review my progress in this way regularly, it helps me adjust my trading throughout the year. I can easily see where I stand in relation to my goals. I can also see if I need to be trading larger, smaller, or even less-frequently based on how my results have been. If things are going well, I need to bump up the size. If my account is shrinking, I need to back down the size and get more selective. And if the results are somewhat stagnant, then it helps me to see that a trip back to the drawing board and a closer review of my recent trading methods may be in order.

Be a responsible trader and keep close tabs on your trading account! I’m willing to bet that forcing yourself to even glance at your daily results will help you make critical adjustments to your trading as the year progresses.

Jeff White
President, The Stock Bandit, Inc.
www.TheStockBandit.com

[tags]Stock Market, Day Trading, Stock Trading, Investing, Swing Trading[/tags]