Phoenix7's Stock Sizzlers

[skiracer]

Actually it's less than a 3% gain.

You invest $100 in each of 5 stocks for a total of $500. Three go up 8% or $8 each on the $100 investment for a gain of $24 total. Two go down 5% giving a loss of $5 each total $10. So you net $14 on a $500 investment, just under 3%.

but what about the individual price of the stocks. The stocks will never all be the same price so 8% will not equal $8 everytime. 8% of a $20 stock is not the same as 8% of a $50 or $60 stock. and the same with the losses. I think you would have to buy the same numerical amount of each stock to get the 8% to work out the same.
Like I said earlier the risk/reward mathmatics just don't work out to be worthwhile. and you would be tying up your money plus the commissions will chew you up which Phoenix cast off as no big deal. but at $10 each way the vig becomes monumental over the course of time at that small a percentage of gain which is not cast in stone. It could easily be a bigger loss than a gain.

[Louetta]

but what about the individual price of the stocks. The stocks will never all be the same price so 8% will not equal $8 everytime. 8% of a $20 stock is not the same as 8% of a $50 or $60 stock. and the same with the losses. I think you would have to buy the same numerical amount of each stock to get the 8% to work out the same.
Like I said earlier the risk/reward mathmatics just don't work out to be worthwhile. and you would be tying up your money plus the commissions will chew you up which Phoenix cast off as no big deal. but at $10 each way the vig becomes monumental over the course of time at that small a percentage of gain which is not cast in stone. It could easily be a bigger loss than a gain.

This actually is worth talking about, methinks. You are right, to make my example work you need to buy the same amount of each stock which is what my example of course does. But since the idea of buying round lots no longer exists this is no problem. Buy 17 shares of this and 11 of that, whatever, to make the amounts come out right. Under his system there is no reason to buy more or less of one than another anyway.

If you have enough money commissions do fade away, e.g. at $10K per position commissions are two tenths of 1% for a round turn anywhere.

As far as tieing up his capital his system is no worse than Ernie's.

The problem is picking stocks which have, on average, a positive bias. If I could do that I would be writing you from the Bahamas instead of sunny but chilly Hamilton.

[Phoenix7]

This actually is worth talking about, methinks. You are right, to make my example work you need to buy the same amount of each stock which is what my example of course does. But since the idea of buying round lots no longer exists this is no problem. Buy 17 shares of this and 11 of that, whatever, to make the amounts come out right. Under his system there is no reason to buy more or less of one than another anyway.

If you have enough money commissions do fade away, e.g. at $10K per position commissions are two tenths of 1% for a round turn anywhere.

As far as tieing up his capital his system is no worse than Ernie's.

The problem is picking stocks which have, on average, a positive bias. If I could do that I would be writing you from the Bahamas instead of sunny but chilly Hamilton.

Louetta Thank you for such great insight. I think that all the minds at Mr market working together should come up with some great picks.

[skiracer]

This actually is worth talking about, methinks. You are right, to make my example work you need to buy the same amount of each stock which is what my example of course does. But since the idea of buying round lots no longer exists this is no problem. Buy 17 shares of this and 11 of that, whatever, to make the amounts come out right. Under his system there is no reason to buy more or less of one than another anyway.

If you have enough money commissions do fade away, e.g. at $10K per position commissions are two tenths of 1% for a round turn anywhere.

As far as tieing up his capital his system is no worse than Ernie's.

The problem is picking stocks which have, on average, a positive bias. If I could do that I would be writing you from the Bahamas instead of sunny but chilly Hamilton.

I would like to see Phoenix use his system for a month or two and document all the trades. Start with 5 stocks and let them go until they either trigger an exit at an 8% gain or stop out at 5% and keep track of the capital used over the course of the trial. and does his system keep 5 stocks going at all times. does he add one each time one exits. and I think that you have to buy the same number of shares of each stock or spend the same amount of money on each position to keep the 8% or 5% gains or losses the same.
and as far as Ernie's system goes, I'm sure you know that I have never been an advocate of it and have voiced my opinion as to the flaws I see in it on plenty of occasions just as I don't see this one holding water either. but if Phoenix or anyone thinks they have a good thing then they should run a trial here in front of everyone. the proof is always in the pudding. I just dont see the mathematics working with it. so he is going to have to show me the beef.

[Phoenix7]

Ski

I would like to see Phoenix use his system for a month or two and document all the trades. Start with 5 stocks and let them go until they either trigger an exit at an 8% gain or stop out at 5% and keep track of the capital used over the course of the trial. and does his system keep 5 stocks going at all times. does he add one each time one exits. and I think that you have to buy the same number of shares of each stock or spend the same amount of money on each position to keep the 8% or 5% gains or losses the same.
and as far as Ernie's system goes, I'm sure you know that I have never been an advocate of it and have voiced my opinion as to the flaws I see in it on plenty of occasions just as I don't see this one holding water either. but if Phoenix or anyone thinks they have a good thing then they should run a trial here in front of everyone. the proof is always in the pudding. I just dont see the mathematics working with it. so he is going to have to show me the beef.

Ski I have started on a small scale with 2 stocks , I will let you know the outcome when it occurs. Remember , I am always looking for ways to enhance one's portfolio.....perhaps this is not the silver bullet?

[Phoenix7]

Most powerful investment strategy!

For those of us here that have a LONG time horizon , the following article should prove invaluable . 5 diversified Stocks are mentioned in the article which should provide a relatively safe path to a secure retirement.
If you have any other LONG TERM buy and hold stocks , please let us know.
Link to Article. http://www.wealthdaily.com/articles/...-all-time/3326

[skiracer]

Ski I have started on a small scale with 2 stocks , I will let you know the outcome when it occurs. Remember , I am always looking for ways to enhance one's portfolio.....perhaps this is not the silver bullet?

Phoenix,
I think you have to take a closer look at the mathematics involved. Especially the risk vs reward math. There is a percentage where the return just does not justify the risk whether it be on one stock play or several. Each trade must justify the risk vs the reward especially when making short term swing trades. For the longer hold trades, of months or perhaps years, other factors become more significant. Depending on the portfolion capitalization it is very important to allocate a certain percentage to each trade you make so that the price and the number of shares bought in each trade remain relative to one another, especially in a system such as what you are recommending.

I dont think taking the risk for somewhere around 3% gain or less is worth risking my capital. I think you have to develope a strategy or plan that provides at least somewhere above 16% and higher returns in a very controlled system with specific risk vs reward percentages between 2-3 to 1. Where for every dollar you risk the return would be at least 2 or 3 times that outlay.
I have been doing this for a number of years and my stops are at a controlled 7% and the gainers run out to the maximum amount I feel that I can get out of the trade. So I'm looking for 3 winners out of 10 trades. 7 trades x 7% losses max. equals 49% but the trades are all at a specific predetermined percentage of the trading portfolio which guarantees they are all the same amount of money invested but the share count may be lower or higher depending on the price of the stock. Anyway those 3 out of 10 winners will almost always run higher than 22-23 % or more which provides that 16% or higher return on the investment.

[Deaddog]

Ski I have started on a small scale with 2 stocks , I will let you know the outcome when it occurs.

Why not let us know in real time? Let us know which stocks you buy, and where your stops and target are located.

[Deaddog]

For what it’s worth, I agree with ski that a risk reward of 1 to 3 is desirable and that 1 to 1.6 is a little shaky.

Firstly you won’t always be able to limit your losses to 5%. Stops are not always filled at the stop price. Stop limit orders might not be filled at all and gaps down can wreak havoc.

When you factor in commissions and slippage it’s just not worth it with a small account.

I disagree that you should have a set percentage as a stop. Stops should be set using support and resistance. If you want to use a percentage (I’m doing this now) determine where your stop should be, if it’s more than your predetermined percentage away from your entry price, pass on the trade.

I determine my risk as a percentage of my account. If I’m willing to take a 1% risk and I have a $25,000 account I will risk $250 per trade. This means that if my stop is $1.00 from my entry price I will buy 250 Shares. It doesn’t matter if the price is $10 or $50 per share. I’m looking strictly at the amount of money at risk.

With $1.00 at risk a $20 stock give me a 5% stop and a 15% target. A $50 stock gives me 2% stop and a 6% target. It doesn’t matter I’m looking to make $750.00 or lose $250.00 on each trade.

With that ratio of risk : reward (1:3) and 30% win rate (you win 3 trades every 10) you will make $50 every trade. Make 100 trades per year and you are up$5000 less expenses.

With a ratio of risk : reward (1:1.6) and 30% win rate (you win 3 trades every 10) you will lose $55 every trade. Make 100 trades per year and you are down $5500 plus your expenses. You need a win rate of 40% to make $10 per trade and then you have to pay commission on top of that, so if you are looking a more than $5.00 per trade you are in the hole.

Just saying a 5% loss and an 8% target probably won’t cut it. If you can get to 50/50 win/loss you’ll do fine.

Also you have to consider your position size and what effect that has on your overall account.

You also have to factor in how many trades you expect to make in a year. If you risk $250 and expect to gain $400 on each trade a 50/50 win rate should work out to $75 per trade in your pocket. 12 trades a year gives you $900 less expenses 52 trades will give you $3900.

[skiracer]

For what it’s worth, I agree with ski that a risk reward of 1 to 3 is desirable and that 1 to 1.6 is a little shaky.

Firstly you won’t always be able to limit your losses to 5%. Stops are not always filled at the stop price. Stop limit orders might not be filled at all and gaps down can wreak havoc.

When you factor in commissions and slippage it’s just not worth it with a small account.

I disagree that you should have a set percentage as a stop. Stops should be set using support and resistance. If you want to use a percentage (I’m doing this now) determine where your stop should be, if it’s more than your predetermined percentage away from your entry price, pass on the trade.

I determine my risk as a percentage of my account. If I’m willing to take a 1% risk and I have a $25,000 account I will risk $250 per trade. This means that if my stop is $1.00 from my entry price I will buy 250 Shares. It doesn’t matter if the price is $10 or $50 per share. I’m looking strictly at the amount of money at risk.

With $1.00 at risk a $20 stock give me a 5% stop and a 15% target. A $50 stock gives me 2% stop and a 6% target. It doesn’t matter I’m looking to make $750.00 or lose $250.00 on each trade.

With that ratio of risk : reward (1:3) and 30% win rate (you win 3 trades every 10) you will make $50 every trade. Make 100 trades per year and you are up$5000 less expenses.

With a ratio of risk : reward (1:1.6) and 30% win rate (you win 3 trades every 10) you will lose $55 every trade. Make 100 trades per year and you are down $5500 plus your expenses. You need a win rate of 40% to make $10 per trade and then you have to pay commission on top of that, so if you are looking a more than $5.00 per trade you are in the hole.

Just saying a 5% loss and an 8% target probably won’t cut it. If you can get to 50/50 win/loss you’ll do fine.

Also you have to consider your position size and what effect that has on your overall account.

You also have to factor in how many trades you expect to make in a year. If you risk $250 and expect to gain $400 on each trade a 50/50 win rate should work out to $75 per trade in your pocket. 12 trades a year gives you $900 less expenses 52 trades will give you $3900.

rational logic and explanations Deaddog. I like the way you determine your risk. I also agree that a risk ratio of 1/1.6 will not work.

[Phoenix7]

Ladies & Gents Thanx

Ladies and Gents Thanx for your input I am trying the 8:5 with just 2 stocks Approximately $2500 each ......I will show you what happened when the trades play out, I am definitely not going whole hog into any investment method.

Phoenix 7

[Phoenix7]

3 Bakken oil Stocks to make millions

The Energy Investor as described by Stock Gumshoe teased 3 stocks that could make you a fortune .....could be a whole load of BS but here is the Link

http://stockgumshoe.com/reviews/20-trillion-report/the-rest-of-those-three-bakken-stocks-below-10/

To expedite matters I have read the stock gumshoe report and the 3 OIL stocks are 1. KOG 2. SSN and 3 TPLM . Does anyone have any of these 3?
For my money I would go with KOG for the coming week!

[skiracer]

Ladies and Gents Thanx for your input I am trying the 8:5 with just 2 stocks Approximately $2500 each ......I will show you what happened when the trades play out, I am definitely not going whole hog into any investment method.

Phoenix 7

Phoenix,
u have to give us the stocks beforehand dont you think? and the entry prices beforehand also.

[em26jamie]

The Energy Investor as described by Stock Gumshoe teased 3 stocks that could make you a fortune .....could be a whole load of BS but here is the Link

http://stockgumshoe.com/reviews/20-trillion-report/the-rest-of-those-three-bakken-stocks-below-10/

To expedite matters I have read the stock gumshoe report and the 3 OIL stocks are 1. KOG 2. SSN and 3 TPLM . Does anyone have any of these 3?
For my money I would go with KOG for the coming week!

I almost bought KOG a while ago, but bought some FTK and CLR instead. They gave me a some real good profits and I sold them. KOG is a good one to have too. I've been tossing around Triangle in my head for a while, but haven't bought any. Decided on SPPI instead.

[Deaddog]

Ladies and Gents Thanx for your input I am trying the 8:5 with just 2 stocks Approximately $2500 each ......I will show you what happened when the trades play out, I am definitely not going whole hog into any investment method.

Phoenix 7

Let me do the math for you:

You are going to take positions worth $2500. You will put your stop at 5% so your risk will be $125 per trade. You are looking for an 8% target or $200 per trade.

3 losers times $125 = $375
2 winners times $200 = $400
After 5 trades you are ahead $25 or $5 per trade.
However it has cost you $7.00 each time you buy and sell or $14 per trade.
You will only lose $9.00 per trade.

I would recommend that you trade as little as possible.

You need 43% win rate to break even if you don’t experience any slippage.

You can find a cheaper broker You need 2.50 per trade to breakeven with 40% win rate.