I'm betting LC will continue to move sideways to down for another day or two.

Too many sellers in PX @20.


*EDIT: If I am reading LC correctly, it would probably resume heading back up by Tuesday.

Click here for the original post: http://www.investmentu.com

A Position Sizing Lesson: Why Size Matters to All Investing Greats

By Brian Hunt, Contributing Editor
Tuesday, May 25, 2004: Issue #340

I made four times my money in JDS Uniphase. But I made one mistake with JDS Uniphase: I didn’t put enough money into the trade, and picked up a valuable lesson on position sizing. It was early 2000, near the top of the bubble, and I was getting used to making 100%-plus returns.

Reading a popular investment newsletter, I fell for the hype surrounding another tech stock, LSI Logic but I wouldn’t make the same “mistake” I did with JDS Uniphase.

“If I’m going to make four times my money again, I’m doing it with over half my portfolio,” I thought.

But something awful happened on the way to the bank: Instead of soaring in value and making me rich, LSI Logic tanked. I was out $23,000 – more than I would even spend on a car!

The LSI Logic loss was brutal, and it wasn’t the only stock I lost money on. So I decided to make a big change. I couldn’t lose that kind of money again.

I left the markets for over a year to study to find out what professional investors do that I didn’t do.

Here’s what I learned…

Position Sizing is What the Pros Do that Novices Don’t

I made all kinds of mistakes starting out, like trying to make a quick buck and buying the most popular stocks but the biggest mistake was ignoring position sizing as a powerful investing concept.

It’s amazing how few investors even consider how much money to place into one investment. That’s all position sizing is the part of your investing strategy that tells you “how much” to place into any one investment.

Position sizing provides the answers to these questions:

• Should you place 10% of your money into one stock?
• How about 50% of your money?

What All Great Traders Have in Common

After taking several big losses in my account, I decided to learn from the greats. I read a book called Market Wizards, and discovered the world’s most successful investors used position sizing by putting only a tiny portion of their money (generally 1-2%) at risk on one idea.

I then learned the specifics of position sizing from the book, Trade Your Way To Financial Freedom, by Dr. Van K. Tharp. After studying thousands of successful traders, Dr. Tharp learned that every trader making millions in the market is fanatical about using position sizing to control risk.

Here’s How You Can Use Position Sizing in Your Own Portfolio

Let’s say you have $100,000 to invest and you’re using the 1% risk model to guide your investments. If you’re using a 25% stop loss, you could buy $4,000 worth of stock and risk $1,000 ($1,000 is 1% of $100,000).

In the example above, you placed 4% of your portfolio into the stock and set a 25% stop – risking just $1,000 of your money (since $1,000 is 25% of $4,000).

Some investors use even tighter stops, in the 10%-15% range.

If you’re using the 1% risk model with a 10% stop loss, you could buy $10,000 worth of stock. You have the same dollar amount at risk ($1,000) as the first example – but you’re allowing the stock less room to go down before you sell.

Now I use smart position sizing – and I never worry about taking big losses like I did with LSI Logic. Take a look at your portfolio today and make sure you know “how much” you have at risk. That way you’ll be prepared regardless of what happens with any one position.

Breakout buy entry

(high+close)/2 > Previous high = buy

Who killed Momentum?

That's who.

FLI's annoying little sucker. Damn.

40 Million wall @ 0.93. Damn.

LC looking to gap up today. yikes

Finance Manila: Trading Systems, Methods & Resources

Added a new link:

Trading Systems, Methods & Resources from Finance Manila (financemanila.net).

Lots of stuff to learn in the thread. Too bad it isn't sticky-ed on FM so I'll be keeping a link for a more direct access instead of digging it from the grave. Worth every time spent reading when one needs guidance.

Haters gonna hate.

If LC is a person, this is what he would probably feel today:

Despite my vow not to go/read forums anymore, I still did as I am bored as hell during trading sessions plus there's really nobody to talk to with regards to stock trading among my friends. Anyway, I am holding LC as my core position now so I frequent the LC thread in Finance Manila.

As I read the thread, I already felt that LC is poised for a heavy correction as majority of the posters are clamoring for a gap up to 1 while others are making calls for it to move to 1.20. As much as I do with everything, I ignored it and moved along. And so the correction came and so the bashers. I think yesterday was the worst day for LC as people started to dig up fundamentals again plus I really felt like bashing my head against the wall too lol.

Today it closed by more than 12%.

I think we can use the forums to use some of our trading decision too. As far as I have observed in the past, when people are clamoring for a gap up, it's time to sell. When people are bashing a certain stock - but with the exception of bash-plenty(is that even correct?) issues - it's time to sell.

Sold JGS for -2% of capital today @26.50 for PX @19.22. I still sold it despite the fact that negative momentum has slowed down/bottomed out already because positive momentum in PX has started to gain already. I am looking for a quick(a week) 10% in PX more or less.

FLI is up! Yay haha. Small position only. "GEO" fund.

DMI buy signal on SCC fyi.

See MA. Today was the confirmation that I was talking about right?

I really like to believe that the sellers in LC got tired selling already this past few days.

Manila Mining Corp "A"

I wanted to buy some MA earlier today but I was afraid lol.

Here are the reason's why I wanted to buy it:



RSI is resting at its support with negative ROC flattening out suggesting the correction is over.

Maybe I should have bought since I was feeling afraid lol. Anyway, confirmation of the next move is tomorrow.

Was thinking of selling JGS for a loss earlier today so I placed my sell order @25.85 but I pulled it out when I saw someone bought up to 25.60. Luckily, it closed @26 although still for a loss. I am starting to get traumatized by doji candlesticks at higher end of the trend lol.

Today is probably the worst day for DMC. -11.70% in one day just because it wasn't included in MSCI(unexpected)?

No way in hell for me to catch the move in ICT today. Will it continue to go higher? I have no idea but I hope it fades the gap back to 55 at least. It is trading another all time high though.

Bought some FLI today @1.25. Let's see how things go from here.
LC is breakeven. :((

Trading tools are back. My current system is for trending stocks, which sucks and prone to buy high sell low in ranging markets.

Divergence on Weekly Charts - Yikes

And we are back on the track!

JGS

So I have been looking to add up my position in JGS so I have been watching it all week. Last Friday, there was a bid of 1M shares @25.50. All of a sudden the bid got pulled out, closing with 250k shares instead which spooks me out. Although before the 1M bid got pulled out, I checked who's been buying all day: 209. All his selling are all from cross sales only so I think 209 is accumulating.

DMI reading suggests strong uptrend so I think buying on pullbacks on 9SMA or 20EMA can be applied to trade this one.

Pullback after breakout(26.55 - bounce) can also be applied for a better position.



Gokongwei stocks are definitely moving.

Blow off setup?

MA(daily): Getting ready for a blow off?




LC(weekly): Same setup? Volume's half way there.

Two consecutive fake buy signals in a row, yesterday was EDC and today in NIKL. Not that they hit my stops already though I still feel I am doing something wrong. Luckily, it's just the "GEO" fund I was using to poke around. I think I'd better stop chasing momentum like a headless chicken now.

Most of the issues right now appear very heavy or this is just the much needed correction? I think I was right on the overly bullish move of DMC yesterday. The momentum of JGS also come to a stop. No stops are hit so no selling yet.

After the huge drop in RFM yesterday, it made a nice recovery today. 5% in a day is nice but looking from its transactions, it appears to have wide spreads so I think I'll pass for the mean time.

What pulled down the market btw?

Missed the DMC train today. Damn. My calculated entry for DMC is 46.07. It's either I buy tomorrow IF it corrects(hopefully I am right in reading the overly bullish movement today) or I buy with the new-high-setup.

Turns out I read JGS right. Either I buy at the open tomorrow or apply new-high-setup too.

Isn't RFM undervalued already? FY10 income report came out today, growing by 71.4% and the stock drops by 7.95%? I do not understand. Charts later if I don't get too wrapped up in playing Dragon Age 2.

Sold GEO for coffee money. Ignored the buy signal today in ICT because there was a wide price spread when it was generated. Turned out I was wrong. Damn.

52-week new high on Friday rule

“The 52-week new highs on Friday rule” is usually applied to the market itself and not to an individual stock.

Rule number 1: On a new 52-week high, when the market closes at or close to its high on a Friday, buy long and go home long for the weekend.

Rule number 2: Exit the long position on the opening the following Tuesday.

Rule number 3: If the market opens lower on Monday, exit the position immediately.

Originally shared by Shoyu Ramen in Finance Manila. Hope he doesn't mind me posting this one out here(sharing to other people and for personal use). Will take this one down if he doesn't want other people posting his stuff.

*Originally from Ino.com. Click the title for the original video/lesson.

Alliance Global Group, Inc. (AGI)

Can you use trendlines/triangle s-r lines like this?