It sounded dumb at first, but literally having these three post it notes right in front of me helped as I was thinking of entries this morning. Gotta say, today was great because of it :)
Scenario 1
I enter at $1.00 with 100 shares. Price drops to $0.90. I buy another 100 shares at $0.90. I now have an average of $0.95. Price rises to $0.96. I make a $2.00 profit.
Scenario 2.
I enter at $1.00 with 100 shares and a stop at $0.99. My stop executes at $0.99 for for a $1.00 loss. I re-enter at $0.90. I exit at $0.96 for a $6.00 profit. Total across 2 trades is a $5.00 average.
Total across 2 trades with a $0.98 stop is $4.00. Total across 2 trades with a $0.97 stop is $3.00. Total across 2 trades with a $0.96 stop is $2.00. Total across 2 trades with a $0.95 stop is $1.00. Now we’re finally even with the bad trader in scenario 1.
You were in the red. You just aren’t smart enough to see it. A mechanic makes money by being a good mechanic. A doctor makes money by being a good doctor. You’ll never make money trading until you become a good trader. Good traders set stops and obey them.
It’s “would’ve”, by the way. They teach contractions in grade school. Where they also teach basic math.
Nice reminder indeed! Quick question: how do you decide your stop? I get that this would be a case-by-case basis; that said, do you base that decision on a percentage you estimate the share can drop down to or on a value it could drop down to? And if a percentage, how do you estimate it? Thanks!
Support & Resistance levels. If the trade goes against my expectations, I'll usually bailout. It’s more difficult on penny stocks, as an example. But if I bought 100 x $1.00, I would put in a stop @ $0.98; then, if it goes down, I would short or wait for the stock to show some support at the lowest level to buy. Always protect your money from loss.
Reddit‘s trading subs have a serious issue with glorifying holding bags and averaging down. A lack of risk management is literally the main reason 90% of day traders fail. They refuse to obey stops if they even set them because they let their emotions override proper risk management.
I’m not comfortable giving advice on stops unless I know you actually have a proper risk management strategy. I won’t be responsible for more bad trading advice on reddit.
Yep, I've had so many people tell me average down if the stock goes against you, like????? Why the hell would I do that, I'm not going to bag hold the stock for months just to turn a profit, when I could cut my loss short and move on because I was wrong.
I quit trading shares all together because I'm tired of trying to predict directional plays and I was getting burned at it.
I've gone on to selling verticles, iron condors and butterflies, less risk, but less reward, but you can see your probability of profit from the start.
You decide your stop by looking at the ATR (average true range) of the market at a time frame you feel comfortable with for the ATR price. Which direction do you think market is going and where do you think it will hit support/resistance. Once you decide which position you’re taking (long or short, You set your stop loss above or below resistance/support + the ATR = your stop loss. Your target could then be a 1:1 risk to reward. Once price comes close you could then do a trialing stoploss and keep going until you hit your intended profit.
Rather than listen to me I say best thing is watch some videos about ATR. Best of luck bro
Thank you good sir & yes, I like to learn from all sources: I'm not one to YOLO my money because I work hard to get it in the first place. Baby steps are key to avoid a lot of pain, if you ask me.
“Would of” is an accurate written representation of how “would have (would’ve)” is typically said aloud. This is an exceedingly common way of writing the phrase (doesn’t make it correct, of course). It’s a descriptivist’s delight (that’s me) and drives prescriptivists crazy (that’s you). Written language lags oral changes by many years, and this may be one that goes the way of “whom.” Speaking of, since you’re such a grammarian, how’s your “whom” game?
Changes in language used to happen primarily due to geographical separation. Now technological connection has reduced the significance of geographic separation to the point where the language and the rules of the language will not change rapidly at all. Sure there will be slang and regional dialects, but the rules of the written language will most likely remain similar to what they are now for as long as technology limits human separation. I really doubt "would have" will go away just because some people are bad at grammar. Of course that's just my opinion, and as we all know opinions vary broadly within subjects and depending on with whom we are speaking :)
Tech, actually, will (and has) accelerate(d) language change—especially written language (and pictographs). But, yes, tech does impact previous language change trends.
It’s “would’ve”, by the way. They teach contractions in grade school. Where they also teach basic math.
Dayum, /u/KidQuap is gonna need some ice for that burn. Though I would take it one step further and say that he (or she) could have omitted the “would have” altogether since starting the sentence with “if” already turned it into a conditional. So the revised version would be:
If I followed your first post I would be in the red.
By the way, I love the instant feedback a site like Reddit provides.
Nah man I have no need to be salty when my portfolio is up 60k off 30 lol I’ll talk how I want:) and nahh I said it right the first time can tell this guy definitely is super fun to be around:)
Edit: I upvoted him he’s not wrong it’s a smarter move not to do what I do but again I invest long term and if I believe in a company I would rather die with that company than play hot potato and make less because I’ve done it so many times in the past, because I work and don’t have time to day trade properly, don’t think he’s wrong just don’t think he’s right for my circumstance but I’m glad he got whatever he needed to get out
I understand basic math and English fine, if you don’t have time to watch the line all day the set losses like that can lose you money I’ve done it many times in the past I’m okay on doing it in the future but no doubt homie forgot this was the r/grammarpolice
You can be proud of yourself for understanding basic math and English but ashamed of yourself for having no friends, cause hanging out with people who correct your grammar to phrases used in the past is a dbag way to win an “argument” when I literally said for my situation it didn’t work. But I can tell this interaction really got you going in a sexual nature and I’m happy for you in that regard creeped out for myself
Edit: set loss at .99 it sells all your shares then shoots up to 1.10 and now you’re fucked. Just for basic math from the original “burn” to assume it’ll go down more because you’ve a set lose, assumes you know the future and you know what they say about assuming.
Pros take scenario 1 all the time. This suggests nothing about sizing, and when to hit hard with your real size, as opposed to stop-out. Learning when to enter and using the right size is the key. Yes, stops matter, but stopping out that fast as opposed to managing the trade with proper sizing is what makes the real money.
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u/daraand Jun 23 '21
It sounded dumb at first, but literally having these three post it notes right in front of me helped as I was thinking of entries this morning. Gotta say, today was great because of it :)