AV's Coin

Investing in the stock market - Discussion

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1 hour ago, Me_ said:

Decided to share a bit of what I do in the Stock Market.

 

It took me about five years to know what kind of boat is best for me. When the financial sea is not for my boat, it stays docked.

 

The interesting part of being a Trend Trader, is that if the job is well done, all Trend Traders end up following the same stocks. 
 

I never look at the stock market during market hours. So from 0930 to 1600, the stock market doesn’t exist to me. I’m not a computer and working against computers, I will lose to emotion.

 

So at around 1900 hours five days a week, I now spend about 45 minutes doing what amounts to accounting. Since by that time all is settled in New York, I look at the Price and Volume of the 20-30 companies I follow.

 

My range is:

$20-$100 per share as anything under $20/share increases the risk per dollar, and anything over $100/ share doesn't move fast enough for me to make money on.

1,000,000 shares traded per day; no limit on the up. This indicates that people are investing in that stock, especially unprompted spikes in volume (THAT'S the news).

52-week high (The stock hasn't been as high in a year as it currently is); All-Time high is best.

 

Each company I “box” it’s price (I find the ceiling and the floor of the stock’s behavior through time), and then I follow it for about three weeks until I personally have empirical data that the price is going up on an increased volume. Most companies fall hard after a while. This monitoring system costs nothing to your equity.

 

If it goes up, I'm interested. If it goes down and out of a "box", I stop following it.

 

If a company proves to me that the price is going up, only then may I put in a pilot buy. Say 10% of my total equity. Where to invest? At the bottom of the next up box. (see below).

 

I never buy at market. I always buy on a Buy Stop at a higher, specific price, with a GTC; “Good ‘Till Cancelled” attached so i can always cancel it. Still free up to now. If the price never reaches my Buy Stop price, it cost nothing at all and I cancel the potential purchase and go on.

 

When I get notification that I was triggered into the market, I then quickly put in a Trailing Stop Loss under the price (10-20% under depending on the accepted fluctuations of that particular stock). This way, if  the stock suffers and the stock goes down, I’m sold out automatically at a set price.

 

I work in %, not in $. The “box” tells me if the price is still in its range, even when it may mean I “lost” that day.

 

If the price is still in the determined box, great. It’s on me to deal with the idea of loss; not my account. If the price goes under the floor of the highest box, I’m sold out. I may leave some money on the table but I usually walk away with quite the profits.

 

That's where it gets interesting for, as the price goes up, so does the Trailing Stop, thereby securing profits. 

 

Here is my last successful trade:

GSX worked well for a while.

I started to follow it on 24 October 2019

I got triggered in on December 16, 2019

I was automatically sold out on 28 February 2020 and I kept 5 shares so I could still "feel" the stock in case it was going to go up again but it never did, so I sold those too.

My system sold me out, I made a profit.

Now my system is telling me NOT to invest in GSX, though I’m still following it.

 

1257592966_ScreenShot2020-04-21at1_21_00AM.png.ff788288a81f7c0cf5b6937ac0742007.png

 

The actual price movement looks like this:

481298441_ScreenShot2020-04-21at1_27_22AM.thumb.png.4dc3055a75d0b50db8f96b99ac4b7b44.png

 

 

My system sold me out entirely out of the stock market on February 28 (except the 5 GSX shares I decided to keep in case but to no avail). It didn’t tell me to get back in until around March 26 when the stock market adjusted to this pandemic. And now the real helpful companies are coming out on top.

 

These are the rules that help me bring in constant profits from the stock market. 
 

MY RULES

  1. Ego, Pride, Fear, Greed and Over-Confidence have to be subdued
  2. Be an impartial diagnostician who does not identify himself with any theory or stock
  3. There is no sure thing in the market - I am bound to be wrong half the time - I must accept this fact.
  4. Do not merely take chances - Reduce risks as far as humanly possible
  5. I don’t have to be invested all the time; only when I prove it makes sense
  6. Opportunity missed by caution is inconsequential misadventure
  7. The equation of weighing the possibility of profit versus the possibility of loss works best
  8. Trade only in listed stocks where there is always a buyer when I want to sell - NEVER "over the counter”
  9. Ignore Wall Street sayings, no matter how ancient and revered
  10. Do not listen to rumours, news, no matter how well founded they may appear
  11. Do not follow advisory services - they are not infallible anywhere - including brokers' advice
  12. Hold on to one rising stock for a longer period rather than juggle with a dozen stocks for a short period at a time
  13. Always put in a pilot buy first. If it rises, double. If it keeps rising, buy more.
  14. Walk. Don't sprint 
  15. When you want to get out of a position, get out.
  16. Always sell what shows you a loss; always keep what shows you profit.

____________________________

OBJECTIVES

1.     Right stocks

2.     Right timing

3.     Small losses

4.     Big profits 

____________________________

TOOLS

1.     Price and volume

2.     Box theory

3.     Automatic buy-order

4.     Stop-loss sell-order

____________________________
 

The “box theory” comes from

Nicholas Darvas’s 1960 book called “How I Made $2,000,000 in the Stock Market.”

 

You can download it online for free as PDF. The most helpful book I’ve ever read and have read probably around 50 times.

____________________________

The books that really helped me figure out the stock market in order of relevance and importance to my style of operation:

 

How I made $2,000,000 in the Stock Market

Nicolas Darvas 1960

 

Trend Following 

Michael W. Covel 2009

 

The Battle for Investment Survival

- G.M. Loeb 1935 (2010)

 

Reminiscence of a Stock Operator

-Edwin Levèvre 1923 (2006)

 

All About Candlestick Charting

- Wayne A. Corbitt 2012

 

How to Make Money in Stocks

- William J. O’Neil 1988 (2009)

 

Consistent Profits in the Stock Market

- Curtis Dahl 1951

 

You Can Make Money on the Stock Market

- Everett J. Mann 1955

 

A, B, C of Investing 

- R.C. Effinger 1947

 

How to Make Money Selling Stocks Short

William J. O’Neil 2005

 

The Intelligent Investor

Benjamin Graham 2006


The Successful Investor

- William J. O’Neil 2003

 

One Up on Wall Street

Peter Lynch 1989

 

Way of the Turtle

Curtis M. Faith 2007

 

 

 

A very wise and knowledgeable post. Mind if I ask how long you've been following markets? Do you trade anything apart from stocks?

 

I use to have a copy of Darvas' book. Not sure what happened to it though. I will have to look for the PDF. Lefevre's "Reminiscences" is a classic. I noticed you did not list any of the "Market Wizards" books by Jack Schwager. Those usually make anyone's list of market related books. I highly recommend all of them. Also, Mark Douglas' "Trading In The Zone" is well worth a read. As is Soros' "The Alchemy Of Finance".

 

Kudos for your chart chart set up. Candlesticks, price, volume and a few MA's. No clutter like Bollinger Bands, RSI, MACD.

 

You sound like you have managed to completely divorce your ego from your trading. That's the whole key to profitability. Some people never learn how to do that. For them it is more important to be right than to make money.

 

Your rules are all very sound. However, I disagree with #9 about the Wall Street sayings. You don't have to live by them but there are some very good lessons to be learned from some of them. One of my favs is "Bulls make money, Bears make money, Pigs get slaughtered" It's very true and a good reminder to not stay at the party too long, so to speak. Also along the same lines "Fattened hogs ain't in luck".

 

One last question. Who do you use as a broker?

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Posted (edited)
1 hour ago, nuckin_futz said:

A very wise and knowledgeable post. Mind if I ask how long you've been following markets? Do you trade anything apart from stocks?

 

I use to have a copy of Darvas' book. Not sure what happened to it though. I will have to look for the PDF. Lefevre's "Reminiscences" is a classic. I noticed you did not list any of the "Market Wizards" books by Jack Schwager. Those usually make anyone's list of market related books. I highly recommend all of them. Also, Mark Douglas' "Trading In The Zone" is well worth a read. As is Soros' "The Alchemy Of Finance".

 

Kudos for your chart chart set up. Candlesticks, price, volume and a few MA's. No clutter like Bollinger Bands, RSI, MACD.

 

You sound like you have managed to completely divorce your ego from your trading. That's the whole key to profitability. Some people never learn how to do that. For them it is more important to be right than to make money.

 

Your rules are all very sound. However, I disagree with #9 about the Wall Street sayings. You don't have to live by them but there are some very good lessons to be learned from some of them. One of my favs is "Bulls make money, Bears make money, Pigs get slaughtered" It's very true and a good reminder to not stay at the party too long, so to speak. Also along the same lines "Fattened hogs ain't in luck".

 

One last question. Who do you use as a broker?

I knew nothing about the stock market in 2012.
 

In 2013-2015, I spent around 12 hours a day, seven days a week learning it, building a system, and abiding by the old adage: “an engineer knows when he’s done, not when he can add, but when he cannot delete anymore.”

 

Now that my system is developed, I spend about 45 minutes a night doing what really amounts to accounting, and about a couple of hours over the weekend, mining for other companies (research). In Bull markets it may take 3-4 hours to go through the whole 52-week high list and during Bear markets, it may be a 10 minute job.

 

I don’t trade anything but stocks. If I cannot find a good stock in roughly 4,000 publicly traded companies, it’s a good indication that the risks of loss are immense at that time. So I stay on the sidelines (but keep monitoring the companies I follow).

 

Thanks for the book recommendations. I will definitely read them all. I had forgotten about “The Alchemy of Finance”. I did read that one.

 

I don’t use a broker. Why would I pay to lose control of my money...

 

I have a margin account at Questrade. I make my own financial decisions and I keep full control of my money. Never had a problem with them.

 

They also allow a margin of 3 to 1. Their borrowing rates are super low, trade costs are $5,00 per trade ($5,00 to buy, $5,00 to sell) and the amount of money I make with a trade, combined with the mere month or two I may be invested in a stock makes that the interest rates on margin are close to none.

 

Edited by Me_
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1 minute ago, Me_ said:

I’ve followed it since 2013.

 

I don’t trade anything but stocks. If I cannot find a good stock in roughly 4,000 publicly traded companies, it’s a good indication that the risks are immense at that time.

 

Thanks for the recommendation. I will definitely read them all.

 

I don’t use a broker. Why would I pay to lose control of my money...

 

I have a margin account at Questrade. I make my own financial decisions and I keep full control. Never had a problem with them.

 

They also allow a margin of 3 to 1. Their borrowing rates are super low, trade costs are $5,00 per trade ($5,00 to buy, $5,00 to sell) and the amount of money I make with a trade, combined with the mere month or two I may be invested in a stock makes that the interest rates on margin are close to none.

Honestly I am pretty shocked to hear you only have 7 years under your belt. I would say for someone with 7 years experience you have acquired a vast wealth of knowledge. I know people who have been at it way longer than you who haven't come to grips with 25% of what you have.

 

By 'broker' I didn't mean a financial advisor. I meant brokerage firm. I can see someone with your thought process and game plan has no use for someone who knows less than you.

 

Keep doing what you're doing. :)

 

 

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Has anyone looked in to tanker stocks?  Companies trading based on transport or holding of oil?

 

With the Saudis trying to flood the NA markets and zero storage capacity you'd have to think stocks in tanker companies would be worth a look

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20 minutes ago, Warhippy said:

Has anyone looked in to tanker stocks?  Companies trading based on transport or holding of oil?

 

With the Saudis trying to flood the NA markets and zero storage capacity you'd have to think stocks in tanker companies would be worth a look

Funny you say that, just yesterday a buddy was talking about Teekay. It’s on the watch list and doing well today, one of the rare ones doing well.

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36 minutes ago, AriGold2.0 said:

Funny you say that, just yesterday a buddy was talking about Teekay. It’s on the watch list and doing well today, one of the rare ones doing well.

Just seems that storage and transport would be doing well under these conditions.

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1 hour ago, Warhippy said:

Just seems that storage and transport would be doing well under these conditions.

What's next storage in rail cars? If it's not already done?

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Posted (edited)
16 minutes ago, AV's Coin said:

What's next storage in rail cars? If it's not already done?

It's inevitable.  We're still producing well above demand.  The entire world is stockpiling their strategic reserves but that's almost topped up too.

 

I'm wondering what happens when the next earnings reports and business/consumer confidence charts come out for North America

Edited by Warhippy

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36 minutes ago, AV's Coin said:

What's next storage in rail cars? If it's not already done?

They could drain Lake Michigan and put it there. :picard:

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When demand is high enough, anything will do.  

 

Example: Garbage bins full of piss at the SFU pub nights back in the day when bathrooms had long lineups.  

:)
 

6 hours ago, AV's Coin said:

What's next storage in rail cars? If it's not already done?

 

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12 hours ago, AriGold2.0 said:

She's sinking today boys.. The buy is coming..

 

I'm still waiting. The Corona news in the States lately has been "better".. cases dropping, deaths dropping. But I think these idiots lifting restrictions so soon are going to get bit real hard. And the market will reflect that in the coming weeks. It appears Buffet has been sitting on the sidelines with cash the past few weeks ultimately for the same reason - another big drop is to come and we're not out of the woods

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Posted (edited)

Further to the discussion of the ETF USO............

 

USO ETF reveals it closed at a 36.4% premium to NAV

Tue 21 Apr 2020 23:43:39 GMT

 

What a mess

uso-nav-chart.png
 
Retail traders are piling into the USO ETF thinking they're bottom-fishing in crude oil. The fund is an absolute mess right now. They stopped issuing new units because they were becoming too large a part of the open interest in futures.

Trading was halted at least four times today and the final time included an announcement that the ETF would shift funds from 80/20 front/second month to whatever mix of oil future it wanted, along with the option to buy gasoline, natural gas and "other petroleum-based fuels".
 
For some reason this set off another misguided rush into the ETF.
 
Now the fund has published its daily holdings and says it holds assets worth $2.06 per share. It's last trade was at $2.81.
 
That's a comically large premium to NAV and means that nearly $1 billion of the $3 billion ETF is a fantasy.
 
As for its holdings -- which are now opaque intraday -- the shift so far is small. Nearly $2.2 billion of the ETF is still in June oil futures but there are pending trades to sell about 40% of that with the vast majority going into the July contract.
 
USO
 
I don't see how this thing survives and I can't understand why brokers would allow clients to trade something at 36% above NAV and guaranteed to lose money. The only sliver of good news here is that by spreading out its holdings among several contracts, it's less likely to spontaneously implode and drag down oil with it.
 
Either that or the things it holds all rally 40% on Wednesday. But if that's the case, I suspect even more retail money will flow in and the premium to NAV will be even greater in the day ahead.
 
****************************
 

Interactive Brokers statement on oil margin losses, circa $88m

Tue 21 Apr 2020 20:31:02 GMT
 

Interactive Brokers statement says several of its customers held long positions in oil contracts on CME and ICE Europe

In a nutshell:
  • customers incurred losses in excess of the equity in their accounts
  • IB has fulfilled required variation margin settlements with the respective clearing houses on behalf of its customers
  • As a result, the Company has recognized an aggregate provisionary loss of approximately $88 million.
  • The Company does not believe that any anticipated losses will have a material effect on its financial condition.
----
Heads up, IB will not be by themselves in this. 
 
***********************
 
There will undoubtedly be other brokers who will take hits. If the hits are severe enough some may not survive. In 2015 during the SNB debacle several brokers including FXCM went under. Knowing your broker's financial condition can save you a lot of headaches.
Edited by nuckin_futz

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3 minutes ago, Tortorella's Rant said:

I'm still waiting. The Corona news in the States lately has been "better".. cases dropping, deaths dropping. But I think these idiots lifting restrictions so soon are going to get bit real hard. And the market will reflect that in the coming weeks. It appears Buffet has been sitting on the sidelines with cash the past few weeks ultimately for the same reason - another big drop is to come and we're not out of the woods

I know I know.. lol.. Just sparking the morning debate..

 

This is only the minor 2nd dip, the 3rd is coming as well when the USA opens the economy and more people start dying. 

 

I plan to be more active on the backside of that. I personally think the Dow could drop lower then March 23rd.

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21 minutes ago, nuckin_futz said:

Further to the discussion of the ETF USO............

 

USO ETF reveals it closed at a 36.4% premium to NAV

Tue 21 Apr 2020 23:43:39 GMT

 

What a mess

uso-nav-chart.png
 
Retail traders are piling into the USO ETF thinking they're bottom-fishing in crude oil. The fund is an absolute mess right now. They stopped issuing new units because they were becoming too large a part of the open interest in futures.

Trading was halted at least four times today and the final time included an announcement that the ETF would shift funds from 80/20 front/second month to whatever mix of oil future it wanted, along with the option to buy gasoline, natural gas and "other petroleum-based fuels".
 
For some reason this set off another misguided rush into the ETF.
 
Now the fund has published its daily holdings and says it holds assets worth $2.06 per share. It's last trade was at $2.81.
 
That's a comically large premium to NAV and means that nearly $1 billion of the $3 billion ETF is a fantasy.
 
As for its holdings -- which are now opaque intraday -- the shift so far is small. Nearly $2.2 billion of the ETF is still in June oil futures but there are pending trades to sell about 40% of that with the vast majority going into the July contract.
 
USO
 
I don't see how this thing survives and I can't understand why brokers would allow clients to trade something at 36% above NAV and guaranteed to lose money. The only sliver of good news here is that by spreading out its holdings among several contracts, it's less likely to spontaneously implode and drag down oil with it.
 
Either that or the things it holds all rally 40% on Wednesday. But if that's the case, I suspect even more retail money will flow in and the premium to NAV will be even greater in the day ahead.
 
****************************
 

Interactive Brokers statement on oil margin losses, circa $88m

Tue 21 Apr 2020 20:31:02 GMT
 

Interactive Brokers statement says several of its customers held long positions in oil contracts on CME and ICE Europe

In a nutshell:
  • customers incurred losses in excess of the equity in their accounts
  • IB has fulfilled required variation margin settlements with the respective clearing houses on behalf of its customers
  • As a result, the Company has recognized an aggregate provisionary loss of approximately $88 million.
  • The Company does not believe that any anticipated losses will have a material effect on its financial condition.
----
Heads up, IB will not be by themselves in this. 
 
***********************
 
There will undoubtedly be other brokers who will take hits. If the hits are severe enough some may not survive. In 2015 during the SNB debacle several brokers including FXCM went under. Knowing your broker's financial condition can save you a lot of headaches.

I was just looking at USO and my brokerage account has blocked buying or selling it.

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2 hours ago, CBH1926 said:

I was just looking at USO and my brokerage account has blocked buying or selling it.

I don't think they should block people from buying and selling it. If people want to trade it on a cash basis, let them.

 

However, if I am the brokerage I am either greatly increasing margin requirements or making USO unmarginable.

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Posted (edited)

Free tip to all you cool cats and kittens. DECN is working towards FDA approval for a self test Covid kit. 
 

Just got 5000 shares at .26

 

Edited by AriGold2.0

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37 minutes ago, AriGold2.0 said:

Free tip to all you cook cats and kittens. DECN is working towards FDA approval for a self test Covid kit. 
 

Just got 5000 shares at .26

 

Questtrade won't let me buy. Says its an OTCN? 

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11 minutes ago, NucksPatsFan said:

Questtrade won't let me buy. Says its an OTCN? 

I have no idea what that means. I got mine through my TD webroker account and had no issues. I paid .02 more per share for the purchase but had faith.

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33 minutes ago, AriGold2.0 said:

I have no idea what that means. I got mine through my TD webroker account and had no issues. I paid .02 more per share for the purchase but had faith.

what?  How?

 

I have a TD web broker account and it refuses to allow me to buy it.  Walk me through your steps because that's a fast riser and if the FDA approves they'll be a 5x earner

 

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