SONS long term

[Runner]

Ski, the numbers is what fires me up about this game. Here is a misunderstanding I think many people have. They think your risking the entire 4K on the trade... Yes you got over 4K on this table but your risking 300. to potentially make almost 1K. Sure it could gap down against you and blow out the 300 risk, but these kind of figures is very important to long term game playing IMO. If some have not looked into the number game I suggest you do so as it is what is most important I think. In fact I’d even go as far as saying it is more important then a perfect entry into a position. If you wanted to scale down just use fewer shares and give it more wiggle room..

Ski, one question I have is why did you select the stop of 4.20? Often the MM or specialist knows he might pick up a slew of orders near gaps and support or resistance lines. What if one used 3.90 as a stop and constructed the trade to meet his/her requirements off the added wiggle room with a smaller bet size? The added wiggle room could be adjusted at anytime during the trade once a reasonable profit area is meet or even the trade moving in the right direction. Just trying to get some feed back on different position sizing possibilities or even exit strategies. ..

[skiracer]

Good posts, men. I love it!!!!

Now Ski, tell me about the 20 day ema. How do you use it to trade? Thanks!
Oh yeah, about the PnF: it disagrees with me. It says $9.25 target; I say I don't think SONS is ready to take a long. But I know the PnF is a lagging indicator most often.

I've always just used the simple 20, 50, and 200 moving averages as indicators to mark trend. This small explanation will give the difference between the two. Because of the way the exponential is figured I find it more meaningful and closer to realtime with less noise in the line. If you were to plot both averages on a chart the exponential would usually be the higher of the two lines. I've posted the same daily of SONS but with the two 20 day averages to show the difference. No big deal but I like the ema better and find it more meaningful when looking to trade the short term. I think it shows if a stock is exhibiting a little more strength when it breaches the higher of the two averages. Take a close look at the two lines and you can see the difference in how they track. Another thing I watch for is the interaction between the two averages. Look at what you see happening when the two averages begin to converge and eventually cross one another. Do you see a change of trend. Subtle but something to watch for over time.

[Runner]

Last one guys, don't want to bore ya..

Here is same 15K model with a 1% account risk. The numbers are very different.
Cost for trade-commision 1,109.
Entry 4.50
Stop 3.90
R/R 1.6 (still very good
Max Shares 246
Potential Profit 244.00
Potential loss 150
Entry to target 22.22%
Entry to stop –13.33%

Less profit but a respectable 1.6 R/R. Sure not close to 1K profit but here is the kicker this small scaled trade over time might produce better wins more consistently then one with tight stops. I’ve often thought of this game as a get rich slow event over a get rich quick… Now with such a small exposure to this bet one may be more willing to try to capture more of a profit. What I mean they may be willing to let the stock play out for a longer time frame and adjust stops accordingly along the way. Say it moves to 7.00 and this trader held on during a P/B. Well his R/R just went to 4.1 still only a 613.00 profit for a risk of 150. Say this trader was looking at a monthly chart of SONS and said well it just cleared 7 and next stop is 10.00. Now this little trade is really starting to look good. Lets see. 10.00 will now jump his R/R to 9.0 with about 1,351.00 profit on a small risk of 150.00 Not bad ya think?

[skiracer]

Last one guys, don't want to bore ya..

Here is same 15K model with a 1% account risk. The numbers are very different.
Cost for trade-commision 1,109.
Entry 4.50
Stop 3.90
R/R 1.6 (still very good
Max Shares 246
Potential Profit 244.00
Potential loss 150
Entry to target 22.22%
Entry to stop –13.33%

Less profit but a respectable 1.6 R/R. Sure not close to 1K profit but here is the kicker this small scaled trade over time might produce better wins more consistently then one with tight stops. I’ve often thought of this game as a get rich slow event over a get rich quick… Now with such a small exposure to this bet one may be more willing to try to capture more of a profit. What I mean they may be willing to let the stock play out for a longer time frame and adjust stops accordingly along the way. Say it moves to 7.00 and this trader held on during a P/B. Well his R/R just went to 4.1 still only a 613.00 profit for a risk of 150. Say this trader was looking at a monthly chart of SONS and said well it just cleared 7 and next stop is 10.00. Now this little trade is really starting to look good. Lets see. 10.00 will now jump his R/R to 9.0 with about 1,351.00 profit on a small risk of 150.00 Not bad ya think?

I agree with you completely Runner. It can be done with varying position sizing according to your portfolio capitalization. $50000 in a $400000 account is basically the same as $5000 in a $40000 account. I think that you are talking about managing the trade which is a significant factor in maximizing the gains or potential for gains while keeping the loss factor to a set minimum.

[Runner]

Ski, exactly the point I’m trying to drive home. Some people think the more I bet the more I make and this may be true. Sometimes the market will reward bad habits. Over the long haul though things will not pan out. Ski your pretty sharp in my eyes!!

[Runner]

I herd or read somewhere if your having trouble sleeping at night you just might be betting a little more then you should. I’ve been in this boat getting up in the middle of the night checking the futures and freaking out because they were not positive. Now check this out I started getting a grip on this bet size stuff and my performance has improved and I sleep most nights. When I can’t sleep it has nothing to do with my trades…

Oh as for me I’d really love to hear other peoples take on this topic as I said it fascinates the tar out of me..

[skiracer]

Ski, the numbers is what fires me up about this game. Here is a misunderstanding I think many people have. They think your risking the entire 4K on the trade... Yes you got over 4K on this table but your risking 300. to potentially make almost 1K. Sure it could gap down against you and blow out the 300 risk, but these kind of figures is very important to long term game playing IMO. If some have not looked into the number game I suggest you do so as it is what is most important I think. In fact I’d even go as far as saying it is more important then a perfect entry into a position. If you wanted to scale down just use fewer shares and give it more wiggle room..

Ski, one question I have is why did you select the stop of 4.20? Often the MM or specialist knows he might pick up a slew of orders near gaps and support or resistance lines. What if one used 3.90 as a stop and constructed the trade to meet his/her requirements off the added wiggle room with a smaller bet size? The added wiggle room could be adjusted at anytime during the trade once a reasonable profit area is meet or even the trade moving in the right direction. Just trying to get some feed back on different position sizing possibilities or even exit strategies. ..

On this particular play two factors came into play. I thought I saw a support area, which I designated with a blue line, and my normal stop loss is around 7%. $4.20 from an entry of $4.50 is .30 or 6.67% off my entry. Even if the support line I think I see was not there I would most likely have placed my normal 7 % stop somewhere right near $4.20. You could do what you are talking about by adjusting the position sizing like you said an I do that on occassion when I'm not feeling as strong about the play. In this case the 1000 shares would be less than a full position size, according to my capital and my normal position sizing. If I were to go to a full position at this price range I would normally take a position of around 4000/5000 shares which would change the dynamics of the plan to a degree but not the stop loss at 7% although the more I have in it the closer I watch just in case it starts to go bad an I think I should exit before it reaches 7% max. point. Very important stuff your talking about and I feel this area should always be given more consideration but doens't always get it.

[peanuts]

I agree with you completely Runner. It can be done with varying position sizing according to your portfolio capitalization. $50000 in a $400000 account is basically the same as $5000 in a $40000 account. I think that you are talking about managing the trade which is a significant factor in maximizing the gains or potential for gains while keeping the loss factor to a set minimum.

I agree with this point, except when the stock in question is thinly traded. I'll tell you, exchanging $50K in a thinly traded stock is not the same thing as trading $50K in a stock with many shares outstanding and avg. daily money flow of $1 million +.

I think that you should consider avg daily volume and money flow when constructing a trading plan with any stock. The more money you have to trade with, the more noticable your trades become to others.

[skiracer]

I agree with this point, except when the stock in question is thinly traded. I'll tell you, exchanging $50K in a thinly traded stock is not the same thing as trading $50K in a stock with many shares outstanding and avg. daily money flow of $1 million +.

I think that you should consider avg daily volume and money flow when constructing a trading plan with any stock. The more money you have to trade with, the more noticable your trades become to others.

True. I try to stay away from stocks that don't trade at least 300000 shares aday, although I have made plays on stocks averaging under that amount.

[Runner]

Nice call on SONS Ski. I was wrong on it... Great Job!!!

[peanuts]

I think that taking the time to investigate a possible play falls on the shoulders of us as traders. It is nice when the poster provides more info but it's the inquisitive mind that will spend the time it takes to look into it. Here's a couple of things about SONS that might be appealling.



Institutional ownership has increased significantly and is up 35 mil. shares over the past couple of months.

Looks like the HOD currently testing the upper black trend line.

[skiracer]

Nice call on SONS Ski. I was wrong on it... Great Job!!!

It's great to be on the upside but I wouldn't call it a winner yet.
Looks to be on the good side though.

[peanuts]

It's great to be on the upside but I wouldn't call it a winner yet.
Looks to be on the good side though.

SONS is looking really strong this morning. Broke through that upper trend line you have indicated and may continue to resistance at your target of $5.60, but the next area of resistance is $5.10

Great play, Ski, great play

[mrmarket]

SONS looks like it is getting some traction here...