Sat May 16, 2020 8:57 am
As a trader your job is to identify the stocks that are going to get these pumps before they pump. Get in, ride it, take solid gain, sell, move on.
Personally...I hold nothing long term. There's too much manipulation and swings that you can capitalize on trading in and out. I mean, a 401k 7-20% annual return seen as pretty great yeah? That mindset is manipulation again...so they can use your funds...to invest for themselves(often times taking a side against your position) and make huge gains while you are told 7-20% is fantastic.
Ok, I'm not a stock God, I'm still continually learning and phuck up plenty. And I'm not bragging I'm simply trying to make the point that everything you are told about investing/returns etc are BS. But in the last 12 months my account is up roughly 300%. YTD I did have some f ups from Rona but I'm still up 50% so far...while many peoples 401's got destroyed and they just ride this up down up down. And these %'s aren't even necessarily good...it's all relative.
It's all about identifying the manipulation that is going to take place and managing the risk so if you are wrong...you don't blow the f up.
Part of this is never holding positions on margin.
So what's margin? Margin are funds your broker matches that they allow you to trade with. So for instance I trade with TD Ameritrade and they give me 4:1 margin. Meaning if my account is 10k they will allow me to trade 40k... basically a loan.
So say you short a biotech cause it's a garbage penny stock blah blah blah. You wake up next morning and they released phenomenal data and it's up 200%(happens all the time on bios). If you traded that with the 40k margin...you just lost 80k. Your account is only 10k. You own your broker 70k.
That's not wise risk management you never use margin like that.
You need to also size into trades properly as risk management. I don't care how sure you are...you did all the research, looked at the financials, etc... stuff happens. You don't throw your entire account into a single trade...ever