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Exit (with a profit or loss) when the 50-day moving average crosses below the 200-day moving average. Use this...
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Use a 10-day or 20-day exponential moving average (EMA) as a trailing stop. Exit your position if the stock h...
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Just be sure to never add to a losing position. Pick a stop loss level when you enter the trade and stick to it.
The key to making a lot of money is not losing a lot of money in the process.
If my trading account goes down 50%, I will need to make 100% in my trading account just to get back to even.
“dumb money” (you and me) to the “smart money” (insiders, VC’s, etc).
You will often get a flurry of IPOs at the end of a long bull market, as we saw in 1999-2000, and as we are now seeing in 2019.
Either way, IPOs can be a great trading vehicle for the experienced trader. This is because IPOs usually have small floats and strong institutional support, at least for the first six months.
small float means that not all of a company's shares are available to be publicly traded.
There are 2 ways to approach an IPO.
The first way is as a long-term investor. If you bought 1 share of Coca-Cola for $40 when it IPO'd in 1919 and held on to it, your position would currently be worth more than $15 million (assuming that you used all dividends that the stock paid you to buy more shares).
As companies stay private longer before having an IPO, the bulk of the gains go to the private market holders.
The second way to approach IPOs is from a trader's perspective. An IPO with a small float has the potential to go up or down a lot, which makes it a great trading vehicle.
the more hyped an IPO is, the more difficult it will be to profit from it on the long side.
If the S&P 500 goes down 10%, a new IPO might go down 50-75%.
look for recent IPOs that are trading in a tight price range, with contracting volume.
It's very important to trade IPOs with a stop loss and strict discipline.
There is usually a "lockup" for IPOs. This means that insiders cannot sell any of their locked-up shares for the first 180 days of trading (this is why new IPOs often have a small float).
If you are trading an IPO, make sure that you are aware of when the lockup expires. Sometimes the expiration of a lockup will not move the stock significantly. Sometimes it will. That is why it is important to pay attention to the price action of a stock around its lockup.
If you decide to do a trade like this, just make sure that you use a "sell to open" order when selling the call option.
If you decide to exit this position, you'll need to use a "buy to close" order to get rid of the call option.
Just never sell your stock before you have exited the call position, or you'll risk ge...
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For every call that you want to sell, you'll need to buy 100 shares of the underlying stock to make this work.
When entering a covered call position, always buy the stock first, then sell the calls at a strike price that is just above where you bought the stock.
As we mentioned before, covered calls work best when a stock is trapped in a trading range (i.e. trading sideways).
Day trading refers to any trading strategy that involves buying and selling a stock on the same day.
By jumping in front of a large institutional player, we can come along for the ride as the mutual fund or hedge fund continues to push the stock up with its buying, or down with its selling.
Here's a day trading strategy that works to capture moves like this: Find a stock that is gapping up on good news (like a better than expected earnings report). Wait 15 minutes after the market's open, and note the stock's price at that time. Put in a limit order to buy the stock at that price. If your order is not executed in the next 15 minutes, cancel your order and walk away. If your order is filled, hold on to the stock for the rest of the trading day, and then take profits a couple of minutes before the market closes that day. Exit the stock early if it trades below the lowest price of
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What is a gap? It's simply when a stock moves up or down sharply, leaving a "gap" or empty space on the chart that separates it from its previous trading range.
Don’t buy stocks that are hitting 52-week lows. Don’t trade penny stocks. Don’t short stocks. Don’t trade on margin. Don’t trade other people’s ideas.
you are almost always much better off buying a stock that is hitting 52-week highs than one hitting 52-week lows.
There is no such thing as a “safe stock.” Even a blue chip stock can go down a lot if it loses its competitive advantage or the company makes bad decisions.
Never buy a stock after you have seen the first cockroach.
If you stick to stocks that are trading above their 200-day moving averages, or that are hitting 52-week highs, you will do much better than trying to catch falling knives.
penny stocks are inherently more volatile than higher-priced stocks. Think of it this way: if a $100 stock moves $1, that is a 1% move. If a $5 stock moves $1, that is a 20% move.
(Mean reversion occurs when a stock moves up sharply from its average trading price, only to fall right back down again to its average trading price).
stay away from trading newsletters that hawk penny stocks.
Watch the movie "The Wolf of Wall Street" if you’d like to see a famous example of the decadent lifestyle and fraud that often surround penny stocks. Viewer discretion is advised.
In order to short a stock, you must first borrow shares of the stock from your broker. You then sell those shares on the open market. If the stock falls in price, you will be able to buy back those shares at a lower price for a profit. If, however, the stock goes up a lot, you may be forced to buy back the shares at a much higher price, and end up losing more money than you ever had in your trading account to begin with.
you owe your broker money, they can haul you into court and go after your house and savings.
If you do end up shorting a stock, remember that your broker will charge you a fee (usually expressed as an annual interest rate) to borrow the stock.
if you are short a stock, you are responsible for paying any dividends on that stock (your broker will automatically take the money out of your account quarterly).
And never short a penny stock. It’s just not worth it.
Trading on margin is thus a form of leverage: it amplifies the performance of your portfolio both on the upside and the downside.
The first reason never to trade someone else’s ideas is that they probably don’t know what they are doing.
Second, even if you get a really good and legitimate trading or investing idea from someone else, you will probably not have the conviction to hold on to it when the going gets tough.
