Original article published on 5/2/2016
What is this all about and why is it important? Unless your are EXTREMELY good at picking solid companies and have the patience level similar to that of Warren Buffett to hold for decades and decades; trading requires you to be governed by rules.
Position sizing is something I reference to often when talking about my trades. It’s different for everyone. That is, if you ask 20 traders about position sizing; you will more than likely get 20 different answers.
So, I am not here to debate what’s the better approach. Although, I would like to hear your thoughts behind it (drop your comments at the end of the article)
At any rate, I see position sizing as a necessary nuisance (there are times I want to put 100% of my money behind a trade-but I wont) to trading survival.
How often do you check the quote of a stock you own? If you’re anything like me; you’re usually plugged into the market 12-15 hours out of any given day. I want to say; since early 2000s; not one single day has gone by without me checking a quote in some fashion or another. This, in my opinion, is beyond ‘crazy’ behavior and can possibly work against you if you’re not careful.
I guess you can add this blog, along with the others I have written, under the category “trader psychology”.
I think a lot, I am a thinker! And this thought came during one of my forever happening thinking sessions.
I am not sure if you’re aware but Electric Car Maker, Tesla (TSLA) is up over 2000%.... YES 2000% since IPO-ing at $17 in 2010. To put that into perspective; if you invested $10,000 in this company when it IPO-ed and left your money in Tesla; that 10k is now north of a quarter of a million dollars ($250,000).
Question: If you made 15 losing trades in a row, taking loss, after loss, after loss; would you be able to take trade #16 without hesitation?
Stock Market Leaders, where are they? One of my very first blogs since starting shortmetina.com discussed the need to pay attention to the overall markets, at all times. It’s important to know what the overall market is doing because that should dictate the direction in which you trade. For example, if we are in a bull market, you want to be net long in your trading portfolio. Meaning, when the market is going up, most of your trades should be on the long side. The opposite holds true. When the market is bearish, most of your trades should be on the short side. Again, it’s super important to know where the market is going because, wherever the stock market goes, so goes your stocks.
What is a hedge or what does it mean; to hedge? If you're a long-time follower or supporter of Short Me Tina, you are aware that I view the Stock Market as uncertain. There are no guarantees when you place a trade. That is, you have the potential to make a lot or lose a lot of money in the stock market. When you're a market participant and engaged in the stock market, understand that your risk is always on. There's just no going around it. Or is there?
Learn simple swing trading strategies that work!
It’s important that you read our articles, What is Swing Trading and How to Start Swing Trading after tackling swing trading strategies. They will give you context to work within and an overview on swing trading in general.
Now that is out of the way; let’s talk about swing trading strategies.
Before you continue with this post check out my blog on "What is Swing Trading".
Want to start swing trading? As a beginner, I am aware, you are probably feeling lost about where to start with it. It’s not the best feeling; I know! I was in your place many, many years ago.
But all is not lost; I will give you a quick guide with the steps needed to start swing trading. Hopefully, this guide will allow you to avoid typical beginner’s mistakes and earn money along the way.
For starters, try to find one or two simple trading strategies (eg: trading the break-out or break-down). You can learn the complex ones as you gain more experience but in trading; I find it’s best to K.I.S.S.
What Is Swing Trading?
Bear with me; it’s the writer in me that takes you through these loop holes before getting to my point but I promise it will be worth it!
When I first started out in the world of ‘investing’ some 15 years ago; the philosophy that flooded the Internet was that of the great, “Warren Buffett” and rightfully so! The man is a billionaire many times over. Net worth is currently 77.1 Billion!! It then makes sense why he is associated with “successful investing”.