Wanna share your stock trading strategies?

[Wrecked944]

Work is slow and I am bored. So let's talk about stocks, eh?

I have a portfolio out on Ameritrade that I've been using as an educational tool for the past few years. I only put about $20k into it and I use it to try out ideas and play with various stock picking strategies. Over the years I managed to lose a pile of money in tech...then switched to closed end international funds and made it all back plus shot up an extra %25 over two years...not exactly stellar but better than a sharp stick in the eye. So now I'm at around $25k. But I am thinking the international funds have run their course. So I am thinking of cashing out in January and trying something new.

Last month, I decided to get a little frisky and sold a couple of the dogs in my international portfolio (mostly my China funds) and threw the money into momentum stocks. I found a stock screening tool and went to town. I didn't throw a ton of money at it and so far the results have been mixed. I'm thinking I really need to learn more about managing my downside risk. Some of my momentum stocks have done well but I think I need to have more discipline about selling the dogs before they can negate the gains made elsewhere.

I'm trying to establish some personal rules for trading...mainly buying with limit orders to lower my cost basis (and only on down days) and being more aggressive with stop loss orders.

Anyway, that is where I'm at with this little hobby. So far I've managed to make more money than I've lost (mainly by sheer luck) so it is a hobby that pays for itself.

So how do you guys trade? Anybody use a particular system? Any good books you can recommend that made you money? I'm thinking of being a more active trader next year so I'm game to try new things.

[Dixie]

Easy... Buy ETF's that track the S&P500, or even larger markets, on a monthly basis for a constant amount.

Sound too simple? Consider these points...

• Outperforming the average is really hard. Think about it... Every time a stock in the S&P outperforms, it in turn move the average up.
• Most funds and stock under perform the S&P by a wide margin.
• You avoid all sorts of trading, and management fees. This automatically increases your returns. it’s like gaining a minimal 3% instant return.
• Your biggest threat is not finding that “big score”. It's that inflation will erode your savings. This applies regardless the rate of inflation.
• You have instant diversification. Even of you own one share.
• You have instant liquidity. Unlike a Mutual Fund, you can get in or out of the market immediately. Not at the end-of-the-day calculated costs.
• Market timing strategies are negated. Market goes down? You can afford more shares. Market goes up? You buy fewer shares. (AKA: cost averaging)

[stevepaa]

I've lost a year's pay twice in my lifetime listening to what brokers/experts/newsletters have said. I charted and made a little. Stock market is all one big joke anyhow. And the joke is always on us little guys. I would not venture to give any one advice in putting money in the stock market. Only interest bearing instruments.

[Burnin' oil]

I generally like to buy low and sell high. Oh, and keep my powder dry, too. . .

[HardDrive]

I split my money into 4 parts, putting each part into a mutual fund. In the last week of the year, I look at how they did, and adjust accordingly. If something is really stinky, I might dump it mid year.

I do have about 10k in 'wild eyed speculation' money that I screw around with. Done damn well with it. Helps when you buy TWTC @ $1.12, and it goes up to $12

[tabs]

I have made a small fortune in the Market over the years...my strategy was to start with a large fortune....

To say I am unhappy with the way things have gone is an understatement.

Lets be specific here...take a long look at Microsoft..trading at $26 and change....the breakup value of the company is in the mid $30 a share range...what does that tell U. ..time to nibble here and nibble there and build a position...

[turbo6bar]

I just trade for long-term. The stocks I buy are for dividends and growth over time. I gave up on trading short-term. I use morningstar.com to search for stocks trading below fair market value. If I get a vibe, I consider how many shares I would like to own eventually, and I buy 1/4 or 1/3 of that number now. I buy more on dips as long as the fundamentals look good. Fundamentals could mean I had a good bike ride that day.

Seriously, I think this isn't easy. I feel most of my gains could be attributed as much to luck as anything (re: put options on TOL days before it drops $4/share).

BTW, guru recently put a buy out on EWJ (Japan ETF). I didn't buy EWJ, and I did transfer some IRA funds into a Japan mutual fund. Darn thing is up 17% in two months. Some folks say Japan is back, but I wonder if it isn't getting overheated already??? If you trust the pimps, look to The East.
jurgen

[Markus33]

Regarding investment books, here a couple of my favorites:

1) The Intelligent Investor, by Benjamin Graham. Chapters 8 and 20 are particularly useful.

2) One Up on Wall Street, by Peter Lynch. Includes some nuggets on fundamantal analysis techniques that should not be overlooked.

Oh, and to quote Lynch, try to avoid "pulling up the flowers to water the weeds."

Good luck.

Markus
'80SC Targa

[widgeon13]

Check out some of the publications of William O'Neil, the man behind Investors Business Daily. I know some people who have used his methodology over time and they are convinced it is profitable and productive. It applies solely to investing in stocks.

[HardDrive]

Janus, why are you souring on international? I don't see an end in sight....

[craigster59]

Shhhhh.... I hear Berkshire Hathaway is buying a major stake in KMart.
I'm taking my "A" stock and moving it over to Apple. If people grasp the "Loveability" of the Ipod and apply it to the G5, I'm gonna be "livin' large". Jack London's "Wolf House" will be realized.

[john_colasante]

It's all gambling. That said, double down into your losses. This simple strategy is what most of the "successful" billionaire traders have used. While it is generally considered a winning method, you may eventually blow yourself out in a dramatic fashion. Good luck.

[ken_xman]

Buy QQQ

[Wrecked944]

Originally posted by HardDrive
Janus, why are you souring on international? I don't see an end in sight....

Only because my two India funds (IIF and IFN) have had huge run ups this past year. Okay, that isn't the most rational analysis, but I've seen these international closed end funds skyrocket and then crash - as happened with my China and Indonesia funds. I folowed China and Indonesia all the way up...and ALL the way back down again. So when I see big short term gains, I begin to worry that the speculators have overbought and that it is time to lock in my profits.

As for mutual funds and such, I wasn't really asking about
"investing" strategies - more like strategies for trading as a hobby. Like I said, I only have $20k in this game and I'm already up. So I feel like I am playing with the "house's money". I've avoided the penny stocks so far...but it seems like they might be fun...if damned risky! And I've never touched options...seems too hard to grasp.

Anyway, momentum is like "Speculation for Dummies"...and I still haven't mastered it. I keep riding the stocks up and then back down again. I think I really need to get more disciplined about setting stop loss orders to preserve my gains. I try to find stock that have "defied" the overall market - in other words, stocks which gained steadily even when the market went down. Using that strategy with my moronic lack of trading discipline has kept me relatively stuck - neither advancing big nor losing big. So my goal for 2006 is to learn when to sell. Damn, it is way harder than it seems.

[Winterfarm]

Find an industry you really understand, get to know the players in that industry and the people running those companies. Identify companies with products or services that people want, that are run by very capable forward-looking managers and that have good balance sheets and capital investments along with sensible marketing strategies and well working production facilities and distribution networks. Then you'll be able to make some intelligent choices.

[cantdrv55]

I trade options and follow the Investools system pretty closely. I've had pretty good success in the short time I've been doing this.

[Hugh R]

Originally posted by ken_xman
Buy QQQ

Couldn't find QQQ on as a stock or mutual fund, what is it?

I put my IRA money in about 25 different funds in Schwab. They're all over the box, from financials, to manufacturing, international, REITs, petrochemical. Small and Large Cap and Growth, International, Trying to diversify as much as possible. Took the money away from Smith Barney after they made me zero money over the last five years (lost a lot and then just barely back where it was five years ago when I dumped them last summer). And they charged me something like 1.5% per year for the priviledge of losing me money.

So far, I'm up about 7% since August. I should have been paying more attention over the last five years. I know a lot of stuff went down, but the S&P 500 returned about 9.9% over the last five years, Smith Barney managed to get me a lot less than that.

[cantdrv55]

Look for QQQQ. I believe it's the Nasdaq 100 ETF.

[turbo6bar]

Originally posted by Hugh R
Couldn't find QQQ on as a stock or mutual fund, what is it?

My guess is he's referring to QQQQ, NASDAQ 100 ETF.

Janus, there is no easy dollar. Regardless, there is money made when you buy quality value companies with intentions of mid to long-term holding. Graham's Intelligent Investor text, mentioned above, presents rational arguments for buying value stocks.

One issue with active trading is you constantly need to find new hot stocks. If your ultimate goal is making money, you need a steady stream of hot buys.

If you're just looking for fun with play money, options and more aggresive trading would be my choice. Scour web sites for those hot stocks.

[Wrecked944]

Originally posted by turbo6bar
Janus, there is no easy dollar....One issue with active trading is you constantly need to find new hot stocks. If your ultimate goal is making money, you need a steady stream of hot buys.

Yeah! That's what makes it fun! Actually my only goal is to make roughly as much money as I lose...I just want to stay in the game and keep trading and learning about it.

If you're just looking for fun with play money, options and more aggresive trading would be my choice. Scour web sites for those hot stocks.

Well like I said, my attempts at "aggressive" trading have been mixed. So far I've made ALL of the rookie mistakes. Most of the time, I feel like I've made money despite myself - not that there's anything wrong with that.

But you've done options, eh? So far, that has seemed too complicated for me - kind of like a great way to give my money away in big chunks. Do you have a particular method or approach? The only thing I think I know about options is that it is supposedly somehow better to buy calls "in the money"....but I've never been able to figure out why...

It's funny. I work in a major financial institution and I write programs frequently that process and report on derivitives. But I could not actually trade them to save my life.