Trading 101 : Osmosis
On this post, I'd like to emphasize on money management and
diversification when dealing with 3rd liners.
But before that....
This game is really kick ass!
Extremely Fun when played using Pads.
Here's a link if you want to try it out
Quick definition of Osmosis.
Definition taken from : http://www.merriam-webster.com/dictionary/
Totally related to trading right?
Well.. not really.. But if you played the game,
you'll get what I mean. Hopefully. Hahahaha
Anyways,
When buying 3rd liners, assuming the chart
is good and all, make sure you study its liquidity.
You don't want to be buying something you can't sell.
So Ask yourself this question:
"If i put in X amount of money in stock Y,
would I be able to sell it with ease on the same day?"
If your answer is YES, then you're one step
ready to make that trade.
Moving on...
I usually keep 1 to 4 Trending Stocks - all with almost the same trade value.
And when a stock is ready for profit taking, I sell all, if not some of it and
transfer the funds to the remaining three stocks or add to a new stock position.
Sometimes I go over 4 stocks, but when I do,
I switch and sell the weakest of my holdings and go
back to the original 4 or less..
Focus is extremely important.
Just imagine if lets say, you have 10 basuras in your port,
all with equal value, then suddenly a wild bear appears!
"Imma eat yea alive biotch!"
And the worst part is, your broker... let's say.. just out of total "randomness"
House 203 would have one of those "stroke moments" during market panics.
What do you do?
Imagine the pain...
So as much as possible, keep or buy only what you can manage.
"Okay Zee Enough with the talk".
I get it. You want results.
Here ya go...
This is the Unshaded Version of
Port as of 1.20.2012
Port as of 1.24.2012
Port as of 1.25.2012
Port as of 1.26.2012
Port as of 1.27.2012
Port as of 1.30.2012
Port as of 1.31.2012
Here are my other trading rules:
On Cutting Losses:
Don't let a loss reach -4%
Cut before it reaches that level.
On Taking Profits:
There are no Target Prices,
Only Trailing Stops.
On Trading A stock:
Trade with bias. If a stock does not
move according to your bias, Sell.
I also get this question a lot, So i'll just Include it here:
"What is my average holding period?"
4 Trading days. Or until a stock's uptrend snaps.
And If I'm dead sure of a killer trade?
I never hesitate to go All-In!
Source: Trading 101: Money Management & Position Sizing - by ZeeFreaks (zeefreaks.blogspot.com)
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