In my opinion, position equals risk unless the position is making money for you ! it's easy to check if the position is making money for you, right ? In a week, or in a Month, or even in 2 Months, if the position market value is dropping, I think you are holding a wrong position! It's much better to hold cash than such money-losing positions.
Then how to avoid such mistakes and always hold a money-making position ?
My simple tip is:
- Hold the position only when the price is above 250MA
Always remember that any position could be a BOMB, especially for those positions whose price is below the 250 MA ! They could GAP DOWN any time and trap you in a deep HOLE very easily !
If a stock is heading up to 250 MA and has a chance to breakout 250 MA, that's a good sign for a bullish run up!
On the other hand, if a stock is heading down to 250 MA and has a chance to break down 250 MA, that's a good sign for a bearish run down!
Please keep these in mind when you make trading decisions, I bet it will surely help you ! I wish I could know this earlier ! But, actually, I learned this very hard over years of trading and investing.
For other technical analysis tips: please refer to here.
I do appreciate your sharings. --yy
ReplyDeleteYou are welcome. Hope you all can learn something from the blog. I also improve my own trading skills during the process.
ReplyDeleteTiger
ReplyDeleteI think 5, 10, 30 days moving average are more practical for short and middle term individual traders, especially 30 dma. Short term traders should focus on 5, 10 dma, and middle term traders should focus on 30 days, or 50 dma. When stock drop to 50, and 200 dma, it is chance to buy.
If stock can holds at 200 dma, then start go up, usually it gives you a big profit.
JZ
I am focusing on more long term trend.
ReplyDeleteOnce 250MA is broken out and heading up, it can not be very easily changed to down. This is the key for us to catch the BIG wave and clearly see the BIG picture. For example:
1. NOW the NASDAQ is up and above 250MA, if during the market correction, 250 MA can hold it well and continue to head up, we will see the BULL wave can run up for at least 1 year. Other wise, the BEAR market continues. SO you can have a BIG picture, regarding the stock market.
2. Look at the stock price development of GROW, it up more than 5000% in 4 years !! This is the way we should trade stocks. Follow the big WAVE.
That's another research topic I am doing now:
How to discover the long-term bull and ride it with a 10-bagger to 100-bagger gain via following the BIG wave correctly.
This is the only way we can make a BIG money in this market: Sit tight and win big while right; lose small when wrong.
Unfortunately, most people win very little when they are right ! But sit very tight and accumulate a BIG loss when they are wrong.
250MA surely gives me a good starting point on this topic ....
250MA, great idea. If I knew this before I wouldn't have been burned so badly...thanks...
ReplyDeleteTiger has emphasized again and again, we should not guess market top or bottom, we should trust TA, buying and selling stock always following the sign. I think this is absolutely right. I have learned hard lessons in the past, probably will continue unless I become more discipline, it’s human nature, it’s very hard to overcome it. But we have to do it; that is a way we can survive in this market. Whenever you become discipline and not gabbling and emotional, then you are mature.
ReplyDeleteI think Tiger’s TA very helpful, from now on I am more flexible, I pay close attention on where he pointed support or resistant area, if any reverse confirmed, I’ll follow it. On July’s market reverse, it has proved he was right. His big difference from Eagle’s is not gabbling the market. This is where we should learn.
Always take loss quickly, no more than 8%, when you are wrong.
JZ
30% system(prediction) + 30% trade management + 40% emotional control
ReplyDeleteThanks Tiger. I've always looked at both 200day SMA and EMA. The SMA and EMA number and direction (rising / falling) can be quite different. So I guess you are using 250 SMA, not EMA? -- 90ufo
ReplyDelete