Saturday, November 28, 2015

What is a good opening position size?


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What is a good opening position size?
                      Credit to Sooah Moon @bb2stocks

When we want to take a position on a new trade, we don't let others see us coming. Therefore, we do not talk when we load (meaning, we do not post boards) and don't load big all at once because big loads trigger big volume and sets off sirens. It will mess up our load plan.

When we load or open a position, we "tap" it or do it in increments.

TAPPING ON STOCKS PRICED BETWEEN 1c - 5c

On stocks 1c - 5c, I like to use 25,000 share taps. Those coming from other groups, this is what the 25,000 share bid rule means--it applies to this particular price range of stock.

No matter how much you like the stock, you have to bid in INCREMENTS and see how the price/volume action reacts! Hence, you bid 25,000 or can even buy ask for 25,000 if the price is still WITHIN the channel or inside the bollies.

Then, if the price/volume reacts positively, you add another 25,000. Even if the price declines slightly from your buy-in BUT still stays inside the consolidation range, it is OK to add.

TAPPING ON STOCKS PRICED BETWEEN 001 - 01

For this price range, I like to use 100K to 250K share taps, keeping in mind total volume. Your opening position is ALWAYS relative to volume traded so if the volume is weak, you want to tap lower increments.

TAPPING ON STOCKS PRICED BETWEEN 0.0001 - 0.001 

For this price range, I religiously follow 1.5% of total volume since confirmed bottom reversal as my MAXIMUM opening position. If you're not careful, stocks in this price range can cause you to lose the most amount of money because people have the tendency to over-buy a position here. If you buy 20MM shares, be prepared to hold the bag and don't be surprised that you and others who bought a ridiculously dangerous amount are the ones clogging up offers!

Keep your position relative to volume traded and small/big enough so that you can exit if the trade failed.

TAP, TAP, TAP.

Wrestle [df] 
1. to compete
2. to force
3. to throw
4. to master (contend)

OTC pigs are dangerous animals, first and foremost because they are so cheap. Stocks that are cheap are cheap for a reason. A typical newbie mentality is to "throw" some money at her. As matter of fact, throw a ton of money at it and see if I can make her "fly" all by myself because I have the money. Well, "Pigs don't fly" and you by yourself--no matter how much money you throw at her--cannot make her a different animal.

When one keeps throwing money at a pig, you are doing what we call FORCING A TRADE and if not careful, you will find yourself wrestling with a pig.
========================================================
1. We wait for a trade to come to US - we don't chase pigs. We wait for the conditions to be met (pattern, intensity/direction...etc. - the 5) and improve our chance of winning.
2. We don't and can't go to every trade - there are many, many pigs so don't cry over a play you're not in
3. It is OK to miss a trade than to make a bad trade - if you don't see the % gain you want, PASS
4. It is OK to miss the bottom (entry) and also the top (exit) on a trade

Change your thinking, correct mistakes and the rest ($$) will come.


Welcome to Chedsblog!   
-Helping new traders avoid my old mistakes-

OTCBB Pennystock trading article topics include:
Reading financials and filings
Market makers 
L2 and chart analysis
Understanding the competition
Using social media to trade
Price and volume study
Bankroll management
Game theory
Sub .01 low float setups
Interviews with influence makers
    OTCBB Penny Stocks Trading Market Makers L2 Charts Technical Analysis Financials Learning Discipline Networking Planning Bankroll Management Taking Profit Paper Trading Options Nasdaq NYSE Small Cap Stock Picks Alerts Bashers Growth Pennystock Sub Penny List Stop Loss Top Hot

    4 comments:

    1. Good reminder to keep greed in check.

      Thx

      ReplyDelete
    2. Crypto economics: time to remove intermediaries
      There are mediators in any economic relations. There are so many of them that even laws treat mediation as a separate type of activity.
      Thus, the Civil Code identifies five types of intermediaries:
      • Commercial representatives: they receive instructions from entrepreneurs and fulfill them;
      • Commission agents: try to sell goods produced by the manufacturer;
      • Attorneys receive orders from entrepreneurs to sell goods and try to promote sales as much as possible;
      • Agents: conclude contracts for sale of goods on behalf of entrepreneurs;
      • Distributors: conduct wholesale trade in goods which are delivered to them by the producer.
      Do we need the above mediators? Undoubtedly, in some cases they perform useful functions. For example, if the manufacturer is experiencing difficulties with sale of goods or it is difficult to deal with the nuances of the legislation, it chooses a good intermediary and pays it for high-quality services.
      There is nothing wrong with the above example. However, the problem is that this does not always happen. Most often, intermediaries do not do anything, but want to get a percent (and rather big) of each transaction.
      Apparently, what’s wrong with that? Many believe that if producers need intermediaries and are willing to pay them, then so be it. However, such an opinion is fundamentally wrong.
      After all, the manufacturer lays down the cost of intermediary services in the value of the goods. Because of this, product prices are constantly rising, and buyers spend more and more money. In the short term, it is only consumers that suffer. But in the long run, economic growth and living standards are declining.
      Crypto economy breaks artificial barriers between the producer and the end user of goods. They will be able to interact with each other through platforms that do not obey anyone.
      Industrial decentralization is the future. Both buyers of goods and the companies that produce them will benefit from the crypto economy. Ultimately, this will make society healthier and fairer.
      Middlemen will disappear from production with the advent of the Yodse platform. It is a unique space where producers and consumers find each other. Yodse assumes only direct interaction between users; there is no place for intermediaries here.

      https://yodse.io/

      ReplyDelete

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