Tuesday, March 25, 2008

stocks on the radar

since december i've mostly been watching financials as the word in the media is apocalypse everywhere. etfc has been my bread and butter during it's recent rebound from the depths of the low $2s, but beyond any specific trades in the financials i'm keeping a constant close eye on several different stocks in various sectors.

quotes for bqi, ncc, tma, sncr, panl, elon, gti, and most recently amkr are always up on my screen now. some of these i watch for the fundamentals of the company or its technology, but generally i like large cap stocks that have been beaten down, rightly or wrongly. generally such a stock will have high volume and be relatively cheap which provides for extreme volatility and subsequently large relative price swings. i guess i just like cheap stocks with high volume whether they've been beaten down or not.

the beat down was what initially attracted me to e*trade, and it paid off well. but i'll admit i spend a bit too much time on the yahoo! finance message boards and began to marry the idea that while etfc had serious problems with it's heloc portfolio its stock price was unfairly decimated. that led me to mix up marrying a company with marrying its stock. there's a difference between being a trader and an investor, and any experienced trader will probably tell you not to let your emotional connection to a particular company cloud your judgment of issues related to its stock price. i neglected to stay up to date with the technicals of the etfc chart and got stuck in a bad trade, which is finally turning back in my favor, but it was a good lesson learned.

i expect to regain minimum equity requirements for pattern day trader status within a week or two, at which point i may try to stop trading for about a week in order to re-evaluate my strategies and draw up a trading plan. when i first gained that status i thought i'd put off that plan until i reached a personal minimum equity level, and that's when etfc burned me.

risk management is of the utmost importance to preserve the capital that supports a trader's lifestyle, and i took a big risk one too many times. my fiancée, beth, gave me supplies for christmas to organize my trading and market education and it's about time i use them. i need to print a big sign to plaster above my trading desk that says some slogans from a few trading books i've read; "trade to trade well and preserve precious capital." maybe print and hide a few notebook cards in oft-accessed places that say, "i will slap you if you break the rules," or "lack of discipline will yield extreme pain."

shoot, trading is easy, but making money trading is tough. it's uncanny how often a stock will tank right after you buy it, but it's just as uncanny how helpful it is to be disciplined enough not to buy a stock simply because it feels right. studying stock, sector, and index charts to find specific indications of price direction is essential, but when you don't have a plan or criteria for what those indications are, then trying to be profitable in the stock market is about as safe as spinning around with your forehead on the end of a baseball bat before attempting to shoot an apple off your child's head from 20 paces with a sawed-off shotgun in the dark.


Beth said...

I actually got you the organizing supplies for our fourth anniversary. But hey, potat-o potot-o.


Ted said...

i knew i was gonna mess that up.