thurs plays

Again nothing close to a play or a lean today.

Regarding swing trading I received the following email I would like to share
my thoughts on:

I am a long time follower and have the utmost respect for your blog.
One question: have u head of the saying behind LTCM “picking up pennies in front of a freight train…” ? “

Let me start out by saying swing trading is by no means a conservative approach to investing. You are always at risk of a black swan event ie news that causes a large loss immediately.

That being said however I dont consider making 1 to 3 percent return in a day or 2 pennies. You can manage your risk by the amount that you invest initially. A comfortable level for me is 20 to 25,000 dollars per trade. Certainly you can increase it or decrease depending on your comfort level. Most of the stocks I trades the amount you trade is not an issue since that are mostly all high volune stocks.

Over the years I have considered many different methods of swing trading. Many use the breakout approach…some use moving average cross overs….but there are just too many methods to mention. The problem with those I have found is the whipsawing that takes place.

With mean reversion the key to me is having a basket of stocks that are solid companies. Then its simply Identifying the market being oversold and the stock being extremely oversold.

So far I have had 6 trades I have posted and we have made money on all 6. But its not this easy and there will be losses.

I hope this gives some insights and if anyone has any other questions please ask away.


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