Sunday, February 18, 2007

Anticipate vs. react ( A.K.A. - where market is going?)

There going to be no answer in this post, not because I have no feeling as to "where and when" market is going, but because it is just that - "feeling".

Better minds are trying to figure out short term direction of the market, I cannot compete with them.
With my luck I am not going to be 1 out of 10,000 who will be able to post on their blog/site long after market will change direction: "We predicted exact date of market collapse!"
And 9,999 others will be quietly holding their horses.
Sounds like unprofitable gamble, is it not?

To anticipate the market is to gamble, to watch and react is to trade.
I trade, I don't expect to triple my portfolio if I'll be able to spot "THE DAY" and jump in with huge margin. I also will NOT lose most of my money if market will prove me wrong

Some might call the way I trade silly, I might open and close position in the same stock multiple times with small losses or gains, I wait for the stock to prove that it is NOW that it WILL move strongly and I WILL make more money in shorter time with better risk/ reward ratio. No matter if I swing trade or day trade, I always wait for "pivot point", I am not trying to buy cheaper ( if I go long) - I want to buy "right where the most money is". Most people call it "breakout/breakdown", I don't mind, but for some reason ( may be because I am as unbalanced in many aspects of my life as great Jessy Livermore was, NO - I cannot compete indeed) I like to call the price I want to see on the tape before I buy just a "pivot point". It implies that there is no guarantee that after breaching that price stock WILL and SHOULD go where I need it to, it just says: " Stock MIGHT move". Will it? I will watch and react.

On my "Members Site" I have "Current ideas" list and "OFF/Archived ideas" list.
Once stock goes off the "current" list it does not automatically implies that it will never make it back to the "current" list, all it is that "THIS IDEA" is currently less appealing than ideas on the "current" list. I am not always able to keep up with all past ideas, but it is highly recommended for MEMBERS to go over "OFFed" ideas and ask me if "that old idea" might look good as of today.

Two recent examples of "OFFed" ideas
(IDIX) was "OFFed" due to market volatility, but since it behaved nicely, I kept watching and finally it moved through the "pivot point" on 2/12/07 where I opened position and produced about 15% in 3 days.
(DCTH) "OFFed" due to the same reason - I kept watching ( I always, well mostly have my email alert set for every single "current" AND "offed" stock - on 2/15/07 made through the Pivot price" of 4.03 - profit of 8% in 2 days.
(LMRA) was placed on the "Current" list as of night of February 14th - nice move right next day ( It amuses me greatly to read all the blogs how everyone spotted LMRA move BEFORE, but posted it after due to been very busy making tons of money, oh well :)

List might go on and on.
I went of the topic, my apologies, what I am saying time and again - watch the market, watch your positions, react swiftly, ask questions later.