Stock Picking and Trading

[Bradman]

Post stocks you are watching and why. Share ideas on how you find stocks that may move big (up or down). Share stories of your trading successes or failures. Discuss strategies, screening techniques, etc. Talk about penny stocks as well, I have see big moves with these. I would like to use this forum to share all ideas, but especially those stocks with high risk/reward.

[Peterw]

I'm watching BP. It's trending down toward a key fibo level and I'll wait to see if it bounces off there or breaks through and keeps going down. MY other half was advised to buy it so I had a look at a chart and that's what I saw.

It's the only equity I'm looking at but I might start watching some good established IT/tech and finance stocks for technical signals with a view to digging into some fundamentals.

My main trading is all forex and my method is pretty much all technical analysis using price action and no indicators. trades I'm in today:

GBP/USD - long at 1.6000 - stop loss at 1.5925. Not looking too good this one..
CHF/JPY - short at 96.40 - stop loss at 96.80. About 10 pips up at the moment.

[Peterw]

Just got taken out of GBP/USD for a 2% loss

Looks like risk-off is a dominant theme today. having said that it's now back above where my stop was so it could have just been stop hunting

Oh well - that's the game I chose to play...

[SnerpGoodWord]

Overall I think I like being long S&P Beta (ES, SPY) right now.

I also like the Alpha component of certain utilities - Black Hills Corporation (BKH) for example. I'm short the Alpha component of AT&T (T).

None of these are the home-run plays OP is describing. All these are multi-week plays. Please no one bet them just because I said so - that's always silly.

[Peterw]

It would appear the EURO has just fallen off a cliff so I've got an order to short it all the way down to 0.0000

[Bradman]

Let me pose a question: I have seen penny stocks that are in bankruptcy proceedings (Example TSTRQ) go from .01 to .05 in a couple days (or the reverse, lol) but one thing that scares me is the idea that it could go into insolvency while I'm holding, even if for a short time. Do you know if there is a way to tell if such a thing is imminent? That would help my confidence. I don't mind losing a certain percentage on a risky trade, but 100% is definitely unacceptable.

[Peterw]

Originally Posted by Bradman

Let me pose a question: I have seen penny stocks that are in bankruptcy proceedings (Example TSTRQ) go from .01 to .05 in a couple days (or the reverse, lol) but one thing that scares me is the idea that it could go into insolvency while I'm holding, even if for a short time. Do you know if there is a way to tell if such a thing is imminent? That would help my confidence. I don't mind losing a certain percentage on a risky trade, but 100% is definitely unacceptable.

I can't help you with the penny stock thing. What kind of money management/position sizing do you use? I risk 2% per trade so a bad one doesn't really matter.

[SnerpGoodWord]

Originally Posted by Bradman

Let me pose a question: I have seen penny stocks that are in bankruptcy proceedings (Example TSTRQ) go from .01 to .05 in a couple days (or the reverse, lol) but one thing that scares me is the idea that it could go into insolvency while I'm holding, even if for a short time. Do you know if there is a way to tell if such a thing is imminent? That would help my confidence. I don't mind losing a certain percentage on a risky trade, but 100% is definitely unacceptable.

Buying equity in bankrupt companies is basically a scam - part of the bankruptcy proceedings is to cancel the existing equity shares. Except in very rare circumstances they're worth zero - the bond holders hold all the cards and will be issued new shares in the post-reorganization company. The appearance of a price higher than zero is typically simply a market manipulation.

[Bradman]

Originally Posted by SnerpGoodWord

Buying equity in bankrupt companies is basically a scam - part of the bankruptcy proceedings is to cancel the existing equity shares. Except in very rare circumstances they're worth zero - the bond holders hold all the cards and will be issued new shares in the post-reorganization company. The appearance of a price higher than zero is typically simply a market manipulation.

You call it a scam/market manipulation, and this is very true! However, I see 500%+ profits for swing trades that happen all the time. Yes, (everyone knows ?) the stock will eventually become worthless. I relegate to the original question of how to know when the shyte will hit the fan, so to speak. I guess what you are saying, (and my guess too) it is unknowable. I just wanted an opinion if there is some way to tell when the shares are about to become untradable - I suppose I could do more research myself to find out if there are ways to tell. Thanks for the comments as always.

[Peterw]

What a day so far- put a order to short EUR/USD at 1.4060 which got triggered last night. So far it's dropped 130 pips during Asia and London open. I shorted at a retest of the long term downward trend line on this weekly chart:



My stop is at breakeven on this so I took another correlated USD trade on NZD/USD.

I had another order on GBP/CAD which also got triggered. It has just broken through and closed below major support at 1.5430 so I sold at a retest of the support level.

As my EUR/USD trade is at breakeven and it's dropping fast I took another correlation in EUR/JPY (short) at 112 and it is now approaching 111, the stop for this one is at breakeven as well.

My account is up almost 10% in open trades and London/Europe have just opened. Now I have to manage the trades to remove risk and stay in for the maximum moves. I love days like this

[coollikeme]

Swiss dollar over U.S. dollar, so far I am finding the right setup at the right time! Like the Aussie also. Any good gold, or silver stocks out?

[Peterw]

*EDIT* Got another chance - reloaded another short position (2% risk) at 1.3955

[Peterw]

@OP - I hope you don't mind short term FX trades in here. If you do we can make another thread for it. Sorry should have asked first

*EDIT* - Mods - might be an idea to put up some sort of disclaimer if people are going to be calling trade ideas, please fele free to use my one - The Best Online Trading Secrets: Risk Disclosure

[Bradman]

Originally Posted by Peterw

@OP - I hope you don't mind short term FX trades in here. If you do we can make another thread for it. Sorry should have asked first

*EDIT* - Mods - might be an idea to put up some sort of disclaimer if people are going to be calling trade ideas, please fele free to use my one - The Best Online Trading Secrets: Risk Disclosure

It's all good, I don't understand FX trades but it might help me to learn. I guess if you want to add a disclaimer it would be up to the individual. I would never say "buy/sell this or that," only "this is what I am looking at, or holding, or selling" etc. (and make no claim to be able to predict the movement of any security - just as nobody can).

[SnerpGoodWord]

Originally Posted by Bradman

You call it a scam/market manipulation, and this is very true! However, I see 500%+ profits for swing trades that happen all the time.

The issue is that you usually can't actually get those prices. Just because a price prints on the tape doesn't mean you can do business at that price. It may very well be a case of a scammer crossing himself (ie. trading with another of his own accounts) to create the impression of movement. That's illegal, but the people who manipulate bankruptcy penny stocks are criminals and the SEC has pretty much written off the whole cesspool, so there's not much in the way of consequences.

[Bradman]

Originally Posted by SnerpGoodWord

The issue is that you usually can't actually get those prices. Just because a price prints on the tape doesn't mean you can do business at that price. It may very well be a case of a scammer crossing himself (ie. trading with another of his own accounts) to create the impression of movement. That's illegal, but the people who manipulate bankruptcy penny stocks are criminals and the SEC has pretty much written off the whole cesspool, so there's not much in the way of consequences.

It depends, and I'm sure it does happen, however, the example I was talking about was during particularly high volume (I watch time/sales real time) so I'm quite sure shares could have been bought at that price. Sometime people panic over certain news and it creates a flurry of selling, only to realize later it was overdone and the news wasn't so bad afterall, only to see the pps come right back up to where it was before.

[Peterw]

Yesterday I was short NZD/USD - today I am long on the same pair (if my order triggers).

yesterday's daily candle is a reversal 'pin bar' or in japanese candlestick terms a hammer. What's more important is the location though. It closed above the round number which is also a weekly support/resistance level. It's also in the direction of the trend. I'm targeting the top of the shaded box area to get out of the whole trade. My stop is about 55 pips away so if it works out it's about 2/1 reward:risk ratio setup. As always I'm risking 2% of my equity.

[SnerpGoodWord]

Originally Posted by Bradman

It depends, and I'm sure it does happen, however, the example I was talking about was during particularly high volume (I watch time/sales real time) so I'm quite sure shares could have been bought at that price. Sometime people panic over certain news and it creates a flurry of selling, only to realize later it was overdone and the news wasn't so bad afterall, only to see the pps come right back up to where it was before.

Well, I would have to see the T&S tape to comment on that instance obviously.

More generally though, what leaves me uneasy about your posts is that the rationale for your counterparty's behavior doesn't make much sense. Suppose I'm the guy willing to bid 0.05 for XYZQQ stock (liquidation for XYZ corp). Let's ignore for a second WHY I would bid the stock and just say I am. Now, what news would conceivably change my mind and drop my bid to .01 or pull it entirely? A news story titled "XYZ Still Bankrupt, Shares Still Worthless"? That's "olds", not "news". And why would I come back and raise my bid back to 0.05 hours or days later and pay off the people who bought at 0.01?

Point being, I don't think it makes sense to explain your counterparty's behavior on the basis of news. It has to be something else, and the only explanations I can think of are serious ignorance or price manipulations related to a penny stock pump & dump. So it seems to me that if there's money to be made here (which I kind of doubt, but let's say there is) that in order to make it you would have to analyze the stock's behavior in light of the real reasons that people are trading it, not based on news.

[Peterw]

Originally Posted by Peterw

Yesterday I was short NZD/USD - today I am long on the same pair (if my order triggers).

yesterday's daily candle is a reversal 'pin bar' or in japanese candlestick terms a hammer. What's more important is the location though. It closed above the round number which is also a weekly support/resistance level. It's also in the direction of the trend. I'm targeting the top of the shaded box area to get out of the whole trade. My stop is about 55 pips away so if it works out it's about 2/1 reward:risk ratio setup. As always I'm risking 2% of my equity.

I didn't get triggered - and it did this:



Oh well - another day tomorrow

[Peterw]

Good day today. Took a small short on EUR/CAD and took full profits at 2R (twice the amount risked) for a 4% gain.

Got a short AUD/USD trade on that's not doing very much at all but I'll hold it into tomorrow and see what happens. At the moment the worst is that it will wipe out half of today's profit from EUR/CAD but maybe later if it moves 1R (1 x the amount risked) in my favour I'll move my stop to breakeven for a risk free trade.

No charts as I'm at work.

[C Brown]

Here is a strategy that works for me.

I go to google finance around 10:00 - 11:30 am (ET) and find companies with at least 1B market cap that have double digit percentage gains. Wait for them to reach their highs and pull back. Buy on the pullback with a reasonable stop. More often than not these stocks (when the overall market is green) gain back most of the pullback during the afternoon session, sometimes they reach new highs. I usually let it run up and when it is showing signs of loosing steam, get out. This probably won't work if your managing millions of dollars, but for $50k or less, I'd say so.

[Bradman]

Originally Posted by C Brown

Here is a strategy that works for me.

I go to google finance around 10:00 - 11:30 am (ET) and find companies with at least 1B market cap that have double digit percentage gains. Wait for them to reach their highs and pull back. Buy on the pullback with a reasonable stop. More often than not these stocks (when the overall market is green) gain back most of the pullback during the afternoon session, sometimes they reach new highs. I usually let it run up and when it is showing signs of loosing steam, get out. This probably won't work if your managing millions of dollars, but for $50k or less, I'd say so.

"This probably won't work if your managing millions of dollars" (LOL!!)

Are you talking about the home page of google finance where it has "popular, price, mrk cap, and vol" tabs?

If so, I've tried that with mixed results, but I may look into doing that more. One thing I've noticed lately is many stocks that have huge pops in the morning fizzle out by the close, but open the next morning up big again. Honestly I don't work with much capital, so a lot of times the commission ($14-18 round trip) is a factor in my strategy.

What % pullback do you look for? What % do you consider a reasonable stop? What % gain would you consider before selling, and do you use trailing stops?

[Peterw]

In 4 trades today!

AUD/USD - this has moved 2R in my favour so my stop is at 1R profit locking in a 2% gain

EUR/USD - as my other xxx/USD trade is not exposing any of my capital to any risk I can take a correlated trade. Thie one is teetering around my entry point so could take me out for -2%

GBP/CAD - This has moved about 1.5R in my favour so my stop is at breakeven on this removing any risk. Looking to lock in 1R/2% if it moves another 30 pips in my direction

NZD/JPY - got 2% of my capital exposed to risk on this one and it's about 15 pips against me right now.. will see what happens when NY opens in a few hours.

I'm short on all of these positions as I'm anticipating some risk off sentiment and liquidating of EUR longs for the end of the week. But this isn't about trying to predict anything. It's about finding a low risk/high probability + high potential reward idea and executing a thought out plan. The market will do whatever it does so all I can do is manage my risk and lock in my profits whilst letting them run (if they do).

[C Brown]

Originally Posted by Bradman

Are you talking about the home page of google finance where it has "popular, price, mrk cap, and vol" tabs?

Yes, I often use the "price" tab. Sometimes I'll look at each sector and find one that fits the bill.

Originally Posted by Bradman

If so, I've tried that with mixed results, but I may look into doing that more. One thing I've noticed lately is many stocks that have huge pops in the morning fizzle out by the close, but open the next morning up big again.

Yes, I've seen this many times, but its hit or miss if the stock doesn't have a history of doing that. If the stock does have a history of doing that the chances of it happening are raised dramatically. Holding over night can cut your position in half if your using 4x intraday margin.

Originally Posted by Bradman

Honestly I don't work with much capital, so a lot of times the commission ($14-18 round trip) is a factor in my strategy.

Thats a bit pricey, my broker is at $10 round trip on equities.

Originally Posted by Bradman

What % pullback do you look for? What % do you consider a reasonable stop? What % gain would you consider before selling, and do you use trailing stops?

What I usually see is a pullback from the highs and somewhat of a leveling off throughout the mid-day. If its slightly trending down, I wait for it to level off. For a stop, I give them 1%, but "reasonable" is different for every person. My sell signal can be several things, either the price starts going sideways after a move up(rare), or I see some volume come in and push the price back down. As far as trailing stops, I'll place them in for damage control, but usually I'm there watching it and will decide to exit long before it is hit. Its mainly for sudden huge price swings, rare, but they do happen.

[SnerpGoodWord]

Originally Posted by C Brown

Thats a bit pricey, my broker is at $10 round trip on equities.

For small retail accounts it's pretty much impossible to beat Interactive Broker's MIN($2, 0.01 per share) round trip cost. For large accounts you should be able to do much better than that.

[C Brown]

Originally Posted by SnerpGoodWord

For small retail accounts it's pretty much impossible to beat Interactive Broker's MIN($2, 0.01 per share) round trip cost. For large accounts you should be able to do much better than that.

I would agree, for trading equities, IB is the most cost effective. To open an account with them, you need $10k.

I trade mostly futures, my broker is MB trading. I like their platform and they only required $2k to open an account. Their main sector is forex traders, because they have some sort of deal where they pay you to place certain types of orders. (limit stop orders, maybe, I don't know, I'm not much into forex) Their rates for futures orders are very good, and their rates for equities are acceptable, to me anyways.

[Peterw]

Originally Posted by Peterw

In 4 trades today!

AUD/USD - this has moved 2R in my favour so my stop is at 1R profit locking in a 2% gain

EUR/USD - as my other xxx/USD trade is not exposing any of my capital to any risk I can take a correlated trade. Thie one is teetering around my entry point so could take me out for -2%

GBP/CAD - This has moved about 1.5R in my favour so my stop is at breakeven on this removing any risk. Looking to lock in 1R/2% if it moves another 30 pips in my direction

NZD/JPY - got 2% of my capital exposed to risk on this one and it's about 15 pips against me right now.. will see what happens when NY opens in a few hours.

I'm short on all of these positions as I'm anticipating some risk off sentiment and liquidating of EUR longs for the end of the week. But this isn't about trying to predict anything. It's about finding a low risk/high probability + high potential reward idea and executing a thought out plan. The market will do whatever it does so all I can do is manage my risk and lock in my profits whilst letting them run (if they do).

AUD/USD - still in this one holding for more of a move. 1R/2% locked in

EUR/USD - didn't do much, about 15 pips against me still - holding into next week

GBP/CAD - stopped out for +1R/2% gain

NZD/JPY - stopped out for -1R/2% loss

Just do you didn't think I was only posting up winners and not losers

[SnerpGoodWord]

Originally Posted by C Brown

I would agree, for trading equities, IB is the most cost effective. To open an account with them, you need $10k.

I trade mostly futures, my broker is MB trading. I like their platform and they only required $2k to open an account. Their main sector is forex traders, because they have some sort of deal where they pay you to place certain types of orders. (limit stop orders, maybe, I don't know, I'm not much into forex) Their rates for futures orders are very good, and their rates for equities are acceptable, to me anyways.

Maybe this is none of my business, but what's the point of having a $2K account when the performance bond on for example a EURO/USD contract (EC/6E) is $5400? I suppose you could trade spot FX or whatever, but it seems to me that someone who can't afford the performance bond on a one car position is in too precarious a financial position to be trading.

[Bradman]

Originally Posted by SnerpGoodWord

Maybe this is none of my business, but what's the point of having a $2K account when the performance bond on for example a EURO/USD contract (EC/6E) is $5400? I suppose you could trade spot FX or whatever, but it seems to me that someone who can't afford the performance bond on a one car position is in too precarious a financial position to be trading.

I guess I don't understand the $5400 number, but I can speak to the $2000 amount for securities. Most people will say that you need at least 10,000 to mess around with trading, and some will say even more (25,000+). Assuming you don't need this money for anything but playing around with, I say, go for it. You could get lucky, or you could lose. I started out with over $10,000 and lost a good portion, maybe I should have started with less and learned how to trade better? Of course my timing was real bad, I got in 2008 just when things really went in the crapper, then tried to short when it rebounded.

On the bright side, I'm making some of it back lately, and consider it a lesson on how not to trade. I try to hold only 1-3 positions lately to keep commissions reasonable. Done good on AXAS lately, sometimes one good position can make all the difference.

[SnerpGoodWord]

$5400 is the minimum account liquidation value you have to have to hold 1 EURO/USD FX contract at CME. In practice you would want a reasonable amount more than that so your position could move against you without liquidation.

My point was just that with an account that small you'd be locked out of FX futures (which seemed to be what he was talking about) nearly entirely. I suppose you could always trade micro-contracts, but you'll get raped on the bid-ask gap and commissions/fees. Or possibly he was talking about futures in general and not FX futures in which case $2000 would give you a few more options - not sure.

I do think $2000 is potentially useful for equities. A 0.5% ($10) round trip cost wouldn't necessarily be fatal there.