Friday, May 11, 2007

How Frequently Should I Trade?

I saw a lot of day trading in and out everyday by newbies seeking for quick 1%, 2% gain (or should I say in reality equal chance to get 1%, 2% loss). My take is if your TA is not good, don't do that.

If you followed me since the inception of this blog, you already knew my style, I wait for the best chance to play bigger fool game:

Example of DT/Swing Momentum calls in the past week:

ASPV (link) : 23-->20 in 2 trading sessions.

OVTI (link) : 15.3-->14.29 after EK CC in 2 trading sessions.

SIGA (link) : Pre-CC 4.75-->5.04 DT, Post-CC blood bath until now 4.85-->3.69 in 3 trading sessions.

JRCC (link) : Post ER 9.3-->11.55 in 3 trading sessions

I predicted all the above momentums beforehand, although the direction of post-CC sell-off of SIGA is a bit unexpected to me, however I have no problem understanding and playing with it following the crowd. Since at the end of the day, my methods can only accurately predict the magnitude of incoming momentums (since I understand the magnitude of the human emotion involved), and will not be 100% right on the direction without knowing the actual event outcome beforehand,

You don't even need to rely on those unpredictable events such as MDTL-April-13th, and PTR-May-3rd. If you can spot them in real time, congratulations. If you cannot, don't worry, you have plenty of opportunities you can know before hand. However I do think once you have followed my approach, you have an edge to identify events such as MDTL in its very early stage ahead of most of the players. And in event such as in PTR, you will have an idea of the magnitude of the going-on momentum.

I am not here to say I can get all the benefit of the maximal length of momentum. That's not the point. The point is, if you can know those huge momentum opportunities beforehand and be under full awareness during the time window, you can profit by following them to capture portion of whole length (I do hope it is the largest possible portion). You don't need to trade frequently. You can trade infrequently say 2-3 times per week, and will still enjoy very nice return. Then you will no longer worry about your day trading limit.

As Jim Rogers Said:

"I just wait until there is money lying on the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime.

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