Sunday, November 29, 2015
How To Save A Ton Money Swing Trading
I get a lot of calls from my broker friends asking my opinion on different stocks. Usually, they ask me after they buy the stock, I always tell them that if they wanted to know my opinion then they should've asked me before they bought it, there is a whole psychological reason behind this that I won't get into. They also tend to ask me about stocks that are already up 4-5 days in a row, usually this is when the story gets around the office, and they start to believe that the stock will never go down. I also see many on Twitter touting breakouts on stocks that are up 4-5 days in a row. If your time frame is 0-20 days then buying a stock up 4-5 days in a row is a poor decision in my opinion. When I say time frame, I mean the actual time frame of your trades, not your mental time frame, or the time frame that you wish you had the ability to hold through. Many traders want to be long term holders until the stock closes down .10 cents, just like many investors who say that they are in it for the long term until the first 5% correction hits them. There is a difference between buying a stock at $15.43 after its up five days in a row and buying that same stock at $15.43 after ten days of sideways action. Very simply the latter offers a better risk reward ratio, not only monetarily but also mentally. If you want to save a lot of money and frustration, don't chase stocks up 4,5,6 days in a row.