Lost $1600 in one day trading OZL

[master82]

Bought 10000 OZL at 1.65 yesterday, sold today at $1.50 - shocking :banghead:

I sold like any newbies would in panic - maybe I should just hold OZL and wait for next week, I don't know I just lost control - all I wanted to do was sell, sell and sell to cut losses.

The market is too volatile for the beginers at the moment, I think I should sell my portfolio and sit on the sideline until condition improves.

[blogs]

Mate whenever you buy use stops regardless of what you think and stick to them like glue!!! I normally use a 5% stop, and if it gets hit ah well, you will get burnt many times over not using stops......Also have a plan for what you want to do-are you in for a quick trade, if so you will also want a sell price etc

[gav]

master, as a fellow newbie I know how u feel. what % loss was that?

[skyQuake]

Stops wouldnt have worked. Gapped down to $1.50 this morning. Were you trying to catch a falling knife?

[blogs]

master, as a fellow newbie I know how u feel. what % loss was that?


Gav--- $1.65-$1.5= $0.15

$0.15/$1.50= 10% loss

So he must have bought $17,600

[James Austin]

Bought 10000 OZL at 1.65 yesterday, sold today at $1.50 - shocking :banghead:

I sold like any newbies would in panic - maybe I should just hold OZL and wait for next week, I don't know I just lost control - all I wanted to do was sell, sell and sell to cut losses.

The market is too volatile for the beginers at the moment, I think I should sell my portfolio and sit on the sideline until condition improves.

sorry to hear it master82,

it happens to virtually every one at some stage, only consolation is you will probably recover from a $1600 loss

also, market panic -- difficult to keep a clear mind when things get hectic -- lots of market experience will eventually teach you how to stay steady when the heat is turned up

its all a learning curve
good luck

[GreatPig]

what % loss was that?
$1.65 down to $1.50 and you can't work out the percentage loss?

Are you sure you want to be in the sharemarket?

GP

[blogs]

sorry to hear it master82,

it happens to virtually every one at some stage, only consolation is you will probably recover from a $1600 loss

also, market panic -- difficult to keep a clear mind when things get hectic -- lots of market experience will eventually teach you how to stay steady when the heat is turned up

its all a learning curve
good luck


True!! If this teaches you anything its avery cheap lesson-you would feel a whole lot better if you knew how much I lost when MAK dropped hard a month or two ago.. :( Made it back on the bounce though :)

[GreatPig]

$1.65-$1.5= $0.15

$0.15/$1.50= 10% loss
That's not correct. Percentage loss is based on the purchase price, not the sale price.

$0.15 / $1.65 = 9%


So he must have bought $17,600
10,000 times $1.65 is $17,600???

GP

[nunthewiser]

It is better to be standing on a jetty watching a sinking ship than being on a sinking ship watching the jetty

[blogs]

That's not correct. Percentage loss is based on the purchase price, not the sale price.

$0.15 / $1.65 = 9%


10,000 times $1.65 is $17,600???

GP


I stand corrected on the first one. I was thinking he has lost $1,600, 10% would make it $17,600 less 10% = $16,000? Or $17,600/ $1.65=10,666 shares x $1.50 = $16,000 and a $1,600 loss? So seems to work for me, though Im tired and its been a long day...?

[mfp]

Gav--- $1.65-$1.5= $0.15

$0.15/$1.50= 10% loss

So he must have bought $17,600

Blogs, it's 0.15/1.65*100=9.09% loss.

You divide the loss by the buy price, not the sell price.

And he obviously bought $16,500 worth, not $17,600.

[Trembling Hand]

Bought 10000 OZL at 1.65 yesterday, sold today at $1.50 - shocking :banghead:

The market is too volatile for the beginers at the moment, I think I should sell my portfolio and sit on the sideline until condition improves.

I find this a bit weird. You have brought a massively down trending stock that has lost 3 years of gains in 3 - 4 months. Yesterday it closed on or near its 3 year low and it gaps down 7% today and you spew out the trade because of the pain. :confused:

What was your thinking here? I think it was a crappy trade but to be suffering with ONLY a 7% drop shows that you had way to much of your capital on this?


I sold like any newbies would in panic - maybe I should just hold OZL and wait for next week, I don't know I just lost control - all I wanted to do was sell, sell and sell to cut losses. No a quick loss is a good loss. most newbies hold until they are down much much more.

[blogs]

Blogs, it's 0.15/1.65*100=9.09% loss.

You divide the loss by the buy price, not the sell price.

lol I know-thats why I said above 'I stand corrected' :banghead: cheers ;)

[mfp]

I stand corrected on the first one. I was thinking he has lost $1,600, 10% would make it $17,600 less 10% = $16,000? Or $17,600/ $1.65=10,666 shares x $1.50 = $16,000 and a $1,600 loss? So seems to work for me, though Im tired and its been a long day...?

10% of $17,600 is $1,760 blogs, not $1,600.

[SGB]

Bought 10000 OZL at 1.65 yesterday, sold today at $1.50 - shocking :banghead:

I sold like any newbies would in panic - maybe I should just hold OZL and wait for next week, I don't know I just lost control - all I wanted to do was sell, sell and sell to cut losses.

The market is too volatile for the beginers at the moment, I think I should sell my portfolio and sit on the sideline until condition improves.

A many of lessons learn't in this sometimes cruel and choppy enviroment. Take a number and join the cue..... This won't be your last mistake.

It's how you can bounce back and learn from this adversity which will make the difference in future trades.

The first question I ask myself before I trade is.

What is my plan for this trade?

SGB

[gav]

$1.65 down to $1.50 and you can't work out the percentage loss?

Are you sure you want to be in the sharemarket?

GP

LOL its been a very long day (actually a long week), and I only quickly glanced at this thread. Obviously a simple answer, but I wasnt the only person here who stuffed it up :o

[Nashezz]

Sorry to hear about your loss master, although as misery loves company you will be happy to learn I lost about $4000 in 10 minutes a few weeks ago as I had a (way too) large long position on Silver just before it plummeted. I then tried to noobishly trade my way out of the loss (another $1500 down in a few hours) and hung on 'hopefully' to another loser as my last ditch effort to redeem some of my losses. All totally wrong. Funnily enough it was the first time I had not used a stop loss, and sadly enough it was on the advice of another trader that I didn't (his suggestion was not to use one as I kept getting stopped out due to the volatility of silver). Reinforced or made me learn some pretty strong messages.

1 - Never EVER trade without a STOP, and related
2 - Protect your capital
3 - Treat 'tips' from other traders as gossip. Some people have some gems of information for beginners but unless it relates to managing risk/capital effectively or some advice on how to find entries and exits, or software, etc I would be inclined to treat it with a massive grain of salt
4 - Manage your risk
5 - Don't trade without a trading plan. I have stopped while I write mine. I was 'lucky' for some few months trading very successfully without a trading plan but in hindsight I can see that I was more lucky then anything else and I was taking ludicrous risks (like 10% of capital), culminating in my big loss in silver where I am now back to square one.

[korrupt_1]

It is better to be standing on a jetty watching a sinking ship than being on a sinking ship watching the jetty

yes... definately rather watch a sinking ship than be on one... but sometimes... one must catch the boat and hope it takes you somewhere... otherwise you'll be standing on the jetty forever ;)

just research your boat a bit and make sure it ain't a rust bucket :)

[master82]

OZL yesterday's close was $1.635 , but today it opened at $1.51 :eek: with today's high at $1.54 and low at $1.48.

I thought yesterday I bought at a good price at $1.65 cuz its 52 weeks was $1.63, obviously I got it very wrong :banghead:

[MichaelD]

Funnily enough it was the first time I had not used a stop loss, and sadly enough it was on the advice of another trader that I didn't (his suggestion was not to use one as I kept getting stopped out due to the volatility of silver).

Please don't use the word "trader" to describe this person. They are not a trader.

[master82]

The reason I chose to trade this stock was that I bought 10,000 OZL 3 weeks ago at $1.68 and sold it at 1.84 on 25/8/08 before it started to plunge back, so this time I wanted to do the same trick again but got burnt - it dropped to a new low of $1.48 - god knows how long it will stay there.

[skyQuake]

OZL yesterday's close was $1.635 , but today it opened at $1.51 :eek: with today's high at $1.54 and low at $1.48.

I thought yesterday I bought at a good price at $1.65 cuz its 52 weeks was $1.63, obviously I got it very wrong :banghead:

If its better to buy at a 'cheap' low price, then by logical progression, the best price is at $0 when the company goes bankrupt. Just think about all those mum and dad investors that were mesmerized by t1, bought in at t2 and continued to buy all the way down...

[canaussieuck]

Heres my worst experience....about a year and a half ago.


What i'm about to share with you, i do so only as a warning to others trading CFD's.

Today i wanted to go short on Copper (may07). I've been trading gold and oil recently on support and resistance, with some minor success. The contracts were all minis. I looked at the chart, and thought this looks like a nice safe spot to enter and it looked like it was slowly breaking down. I put in my order for 5 (yes 5 contracts), thinking it was a mini .

Immediately i realised my mistake, too late, the spread took 1500.00 right away. I thought, oh my god.....then i thought...wait, trade it like i planned...be cool, calm. It proceeded to push UP through the channel line over the next two hours and when i finally pulled the pin i lost 6900.00.

So far in my trading over the last couple of years i've never taken a loss like this, they've been much smaller, on shares, using tight stops.

This was a stupid, stupid mistake which i hope non of the other "inexperienced" members here make.

I had no real plan
I did not check out the contract size properly
I took no consideration of risk at all

I was gambling, plain and simple.

CFD's are dangerous....be aware.

Cheers,

http://www.aussiestockforums.com/forums/showthread.php?p=144665#post144665

[cutz]

The reason I chose to trade this stock was that I bought 10,000 OZL 3 weeks ago at $1.68 and sold it at 1.84 on 25/8/08 before it started to plunge back, so this time I wanted to do the same trick again but got burnt - it dropped to a new low of $1.48 - god knows how long it will stay there.

This must be common train of thought with beginners. I mainly hold long term blue chips but I had a crack at catching a falling knife recently, made a profit, went in again then the stock went through the floor, should have known better. Don’t feel too bad at least you got out with a small loss.

Cutz.

[NotaDuck]

Blogs you said that you use a 5% stop. In this case what is your usual target?

[Trembling Hand]

OZL yesterday's close was $1.635 , but today it opened at $1.51 :eek: with today's high at $1.54 and low at $1.48.

I thought yesterday I bought at a good price at $1.65 cuz its 52 weeks was $1.63, obviously I got it very wrong :banghead:

But this is the thing I just don't get. A very quick (1 min) look at the moves of this stock in excel from close to close tell me that the average negative day for the last 2 months is just over -4%.

How can a 7.5% fall be a suprise?? Only 2 weeks ago it fell 9% in one day then two weeks before that 15%.

Whats the point of this thread?? You say the market is to volatile. If you have no skill in judging adverse stock movements no market will suit you.

[master82]

But this is the thing I just don't get. A very quick (1 min) look at the moves of this stock in excel from close to close tell me that the average negative day for the last 2 months is just over -4%.

How can a 7.5% fall be a suprise?? Only 2 weeks ago it fell 9% in one day then two weeks before that 15%.

Whats the point of this thread?? You say the market is to volatile. If you have no skill in judging adverse stock movements no market will suit you.

Are you suggesting I should hold the stock? Initially I really wanted to keep it to see how it goes next week, but it dropped to two year low of $1.48 which scared me so I sold off

[BentRod]

I sold like any newbies would in panic


all I wanted to do was sell, sell and sell to cut losses

Seems to me you did the right thing, a N00b as you put it, would still be holding.

[cutz]

Trembling Hand,

What’s the formula for separating the negative averages from the positive averages in a row of percentages?

Cutz

[Trembling Hand]

Are you suggesting I should hold the stock? Initially I really wanted to keep it to see how it goes next week, but it dropped to two year low of $1.48 which scared me so I sold off

NO. What I am saying is that the adverse move that you inflicted on yourself was a completely expected one. Yet you seemed surprised!!

My point is your position was obviously way to large for your account to cause such stress. correct? You have blamed the "volatile market" which is completely incorrect.

Do you know about position sizing?

[Julia]

Are you suggesting I should hold the stock? Initially I really wanted to keep it to see how it goes next week, but it dropped to two year low of $1.48 which scared me so I sold off
I wouldn't want to pre-empt TH's reply but I suspect he might have rather been wondering why you'd get into it in the first place, in that it has been in a clear downtrend and trading below the MA for some considerable time.

Might be good to stand aside from the present volatility while your loss is as small as this.

[Trembling Hand]

Trembling Hand,

What’s the formula for separating the negative averages from the positive averages in a row of percentages?

Cutz

=IF([CELL]<0,[CELL],0)

Will give you only values that are negative.

[Trembling Hand]

Julia that two.

[cutz]

Thanks

cutz.

[jonojpsg]

TH is spot on - this is all about position sizing. Setting a mandatory stop of 5% basically means if you have all of your capital in one trade then you stand to lose 5% of your capital.

If this fits with your plan then OK, but if you only are prepared to lose the standard noobe 2%, then you need to adjjust according to how much of your capital you are risking.

EG if you put 20% of your capital in a trade, then you can set your stop 10% below buy price as 10% of 20% is 2%. This is pretty much my trading plan, although I have made some huge slip ups by not setting stop losses recently so who am I to talk :o

[master82]

NO. What I am saying is that the adverse move that you inflicted on yourself was a completely expected one. Yet you seemed surprised!!

My point is your position was obviously way to large for your account to cause such stress. correct? You have blamed the "volatile market" which is completely incorrect.

Do you know about position sizing?


The reason I chose to trade this stock was that I bought 10,000 OZL 3 weeks ago at $1.68 and sold it at 1.84 on 25/8/08 before it started to plunge back, so this time I wanted to do the same trick again but got burnt - it dropped to a new low of $1.48 - god knows how long it will stay there.

It was pure speculation like a gamble - I have so much to learn

[BentRod]

TH is spot on - this is all about position sizing. Setting a mandatory stop of 5% basically means if you have all of your capital in one trade then you stand to lose 5% of your capital.

You won't last long risking 5% per trade.

I doubt TH would be 'for' risking 5%.

[Trembling Hand]

It was pure speculation like a gamble - I have so much to learn

Like money management and position sizing for starters. The R:R. Then trends. But I suspect if you keep "gambling" you will not last long enough to learn.
Anyway....... Good luck.

[kam75]

Bought 10000 OZL at 1.65 yesterday, sold today at $1.50 - shocking :banghead:

I sold like any newbies would in panic - maybe I should just hold OZL and wait for next week, I don't know I just lost control - all I wanted to do was sell, sell and sell to cut losses.

The market is too volatile for the beginers at the moment, I think I should sell my portfolio and sit on the sideline until condition improves.


This stock is entrenched in a raging downtrend since busting support around the $2.50 level - what were you thinking? This dog has a lot further to go till some heavy support, around the 1.00 and then 0.75. Short it.

Regards
kam75
_____________________________
http://www.sharesmadeeasy.com

[brty]

Hi,

Despite all the negatives about the $1.65 level portrayed, that could have been a good point to buy, with a stoploss.

Granted that if the stoploss went off, then there was too be a large slippage, 9-10% :eek: ,then if the trading plan was enacted it was the correct trade to take.

However if this was the trading plan, then only a small % of the capital base should be employed as the chance of a "high" slippage into stoploss is great.

If there was no overall plan other than to buy something that looks like it is meeting support, then err buyer beware.

brty

PS this almost set off a buy in my short term trade system yesterday, and if the stoploss had gone off, so be it.

[Greg71]

It will be most annoying if the doji becomes an island reversal on Monday.

Well done by taking the loss. It's a tax deduction anyway.

http://www.salespagesoftware.com/images/ozl.gif

[BentRod]

Well done by taking the loss.

I agree.

If OZL opens @ 1.30 on Monday would you still think you were a donk for selling or would you suddenly be 'real smart' then?

[Pat]

OZL is a dog!!! At least until my 'bad luck' mate sells. LOL!!!

Get that Dan?

[OK2]

Was anyone able to calculate his brokerage fees??? You guys should be working for the ATO.

[Trembling Hand]

Hi,

Despite all the negatives about the $1.65 level portrayed, that could have been a good point to buy, with a stoploss.


Yep Brty I hear you but if you want to play Russian Roulette you should do it with a water pistol not a single barrel shot gun. :eek7:

That is a tiny % of capital.

[Nyden]

I agree.

If OZL opens @ 1.30 on Monday would you still think you were a donk for selling or would you suddenly be 'real smart' then?

If copper continues its current trend; definite possibility imo. Perhaps not on Monday, but in the future.

In all truth master I think you did the right thing; but I'm somewhat biased - being that I'm currently an uber-bear on commodities (aka the Aussie market ;)):)

[blogs]

You won't last long risking 5% per trade.

I doubt TH would be 'for' risking 5%.

I personally have picked 5% becasue its an amount Im comfortable with loosing on a trade, I feel anything less than 5% is to small becasue many of the stocks I look at continually trade within 5% range in the space of just a few hours and you can get forced to sell for no good reason.

Why what % do others use?

[Trembling Hand]

I personally have picked 5% becasue its an amount Im comfortable with loosing on a trade, I feel anything less than 5% is to small becasue many of the stocks I look at continually trade within 5% range in the space of just a few hours and you can get forced to sell for no good reason.


You have this mixed up hopefully?? We are talking about max stop risk to account capital NOT share movement. You surely aren't risking 5% of your capital per trade??



Why what % do others use? Most consider 2% as a max. But then again it seems most are actually comfortable with 1% or 0.5%. Me even less than that.

[professor_frink]

I personally have picked 5% becasue its an amount Im comfortable with loosing on a trade, I feel anything less than 5% is to small becasue many of the stocks I look at continually trade within 5% range in the space of just a few hours and you can get forced to sell for no good reason.

Why what % do others use?

5% doesn't refer to using a stop loss 5% away from the purchase price blogs.

Instead of typing it out, here's a post nizar made awhile back on this subject -

http://www.aussiestockforums.com/forums/showpost.php?p=209034&postcount=6


Fixed Fractional position sizing

Lets say for the example you have a capital base of $10,000
and you wish to trade a $1 stock with the lot.
You dont wish to risk more than 5% of your capital on the trade.
So maximum risk is $500.

You like the stock and think that a 5c stop would be best.
So $500/. 05c = 10000 so you CAN buy 10000 with a 5c stop no problem.

Lets say you think its going to fly so you only have a 2c stop.
so $500/.02c = 25000 so you could maintain the same $500 risk and invest in $25000 of shares had you the capital.

OK lets say you wish to use a wider stop can you still buy 10000 shares?
So $500/.20 = 2500 obviously no you cant you must buy 2500 ONLY to maintain the same 5% risk with a 20c stop.

So same maths applies to any position you take.

$15300 capital, 5% risk how many shares can I buy of a stock trading at $1.92c with an 18c stop?

$ at risk = 15300 x .05% = $765.
765/.18c = 4250 shares 4250 x $1.92 = $8160 so you can ONLY buy 4250 shares at an 18 cent risk to maintain the same 5% risk to capital.

Ill go further and talk about Reward to Risk or the R/R ratio.

If you buy and then sell the $1.92 stock for a 54 cent profit you have returned on that trade a 3:1 R/R ratio.
This is calculated by 54c (the profit)/18c (The risk) = 3 so 3 times the risk has been returned.
So if you win 2 out of 3 trades with this sort of R/R ratio then your doing well.

Also in terms of books Mike Lally's I havent read it.
I have read one by Ryan Jones (Trading Game) and it does cover the topic of risk rather well. Search on this site there is a link to an e-book posted by RichKid ages ago.

Hope that helps.

[skyQuake]

You dont have to risk 5% of your entire Capital on a trade. Trading at 5% on any position unless you have a really good expectancy is long term bankruptcy.

You could simply put say 20% of your capital in the trade and still put in a 5% stop loss, and thus only risking 1% of your capital.

See attached pic. If your expectancy is say 55%, theres a 58% chance that you'll have 5 losing trades in a row. Can you or your capital handle that?

Just something to think about re position sizing. Remember a 25% loss needs a 33% gain to break even.

[blogs]

You have this mixed up hopefully?? We are talking about max stop risk to account capital NOT share movement. You surely aren't risking 5% of your capital per trade??


Most consider 2% as a max. But then again it seems most are actually comfortable with 1% or 0.5%. Me even less than that.


Ahhhh now I getchya!! :banghead: Thanks, and also to the guys who posted after you-good stuff :o

[Seneca60BC]

You think thats a big loss? Try $20,000! I lost - yes may make you feel all all that better.

Cheers

[GreatPig]

Absolute dollar amounts of wins and losses are meaningless without knowing the capital base. For someone using $50K, a $20K loss would be devastating, but for someone with $10m in the market it's only 0.2%.

For Warren Buffet, it probably wouldn't even cover brokerage on one position.

GP

[korrupt_1]

You don't feel so stupid now do you? OZL down to $1.35...

[martraci]

what a ****in` dog

[Seneca60BC]

yea thats about 20% of my capital - sorry forgot to mention

[mattyhammer]

Absolute dollar amounts of wins and losses are meaningless without knowing the capital base. For someone using $50K, a $20K loss would be devastatingGP

Ha, that's me!!! Yes it is devastating. All those terms you "experienced" guys use like noob, joob, newbie, etc. Thats me too!! No I'm not laughing in a psychopathic kind of way, just don't know what else to do. I put in $3.5k on OZL at $3.57. Figured it was always gonna come back....???? Why am I doing this to myself. BHP is doing the same bloody thing...I'd do better at Jupiters.

[Trembling Hand]

yea thats about 20% of my capital - sorry forgot to mention

:eek::( Two words will take you out the door of the casino into the world of a trader.........

POSITION SIZING.


Please do yourself a favour become an expert in it before you take another step.

[skyQuake]

Hope that was total loss for year, otherwise its just plain stupid

[noident]

:eek::( Two words will take you out the door of the casino into the world of a trader.........

POSITION SIZING.



The way the market has been of late - it (or at least its major sectors) is moving up and down at once - all stocks. It doesn't make much of a difference how many positions you have - they all seem to move together, some more some less. All we can hear of now is a sea of red/green.
Just an observation.

[Trembling Hand]

The way the market has been of late - it (or at least its major sectors) is moving up and down at once - all stocks. It doesn't make much of a difference how many positions you have - they all seem to move together, some more some less. All we can hear of now is a sea of red/green.
Just an observation.

I'm not sure what your point is here. But position sizing is what protects you from blowing out. It will protect you when markets get crazy. It will protect you from blaming the Market for your own silly mistakes IMHO.

[bunyip]

Hi,

Despite all the negatives about the $1.65 level portrayed, that could have been a good point to buy, with a stoploss.

Granted that if the stoploss went off, then there was too be a large slippage, 9-10% :eek: ,then if the trading plan was enacted it was the correct trade to take.

However if this was the trading plan, then only a small % of the capital base should be employed as the chance of a "high" slippage into stoploss is great.

If there was no overall plan other than to buy something that looks like it is meeting support, then err buyer beware.

brty

PS this almost set off a buy in my short term trade system yesterday, and if the stoploss had gone off, so be it.

And why exactly could $1.65 have been a good place to buy? The stock was in a clear downtrend.
Can you explain why it's a good idea to buy stocks that are in downtrends?
If you buy downtrending stocks they're going to lose you money.
Sure there's an odd exception, but if you want to learn six words that will save you a lot of heartache in the trading game, then you should memorise the following.....Buy a downtrending stock - lose money.

[martraci]

short a down trending stock - make money

[nioka]

short a down trending stock - make money
OZL up 6%+ today. Not a good result for that idea so far.

[brty]

Bunyip,


And why exactly could $1.65 have been a good place to buy?


Notice the word could?? It is not would.

At $1.65, OZL was at support from previous bottoms with large volume. If your system/methodology had shown such places to be a potential buy, then you would do it, with a stop.


If you buy downtrending stocks they're going to lose you money.

I agree, most of the time it is a losing strategy.


Sure there's an odd exception

So what is wrong with finding such a time to dip your toes in?? while waiting for the market to prove you correct for your main position?? (ie small close stop losses).

A bloke by the name of Jim Rogers uses such a strategy, so he must not be a very good trader.:rolleyes:

You probably missed this bit...


If there was no overall plan other than to buy something that looks like it is meeting support, then err buyer beware.

As $1600 appears to be a large % of the account size, then it is a silly trade, however if it had been less than 1% (which includes the large slippage of a stop), then you could buy at a lot worse places.

brty

[bunyip]

Notice the word could?? It is not would.

At $1.65, OZL was at support from previous bottoms with large volume. If your system/methodology had shown such places to be a potential buy, then you would do it, with a stop.

Yes, I saw the support at previous bottoms, and also the volume, but I saw no sign of the down move running out of steam as it approached that support, no candle with a long lower tail that showed rejection of lower prices - nothing. Quite the contrary in fact. What I saw was a big ugly red candle that closed near its low and gave every indication that the stock was headed lower.



I agree, most of the time it is a losing strategy.

Then why in the name of creation would you trade a strategy that stacks the odds so heavily against you that most of the time it loses? Why not use a strategy that stacks the odds in your favour?



So what is wrong with finding such a time to dip your toes in?? while waiting for the market to prove you correct for your main position?? (ie small close stop losses).

What's wrong with it is that, by your own admission, it's a losing strategy most of the time. Far better to trade a strategy that wins more times than it loses, or at least gives you a fair chance of achieving a 50/50 win/loss rate. Yes, I know the winning percentage is far less important than the size of your wins versus the size of your losses. But to trade a strategy that loses most of the time is doing things the hard way.

A bloke by the name of Jim Rogers uses such a strategy, so he must not be a very good trader.:rolleyes:

I've never heard of Jim Rogers, but since you've mentioned him I presume he must trade this strategy profitably. I'd suggest that he'd be even more profitable if he traded with the trend, rather than against it.

You probably missed this bit...
As $1600 appears to be a large % of the account size, then it is a silly trade, however if it had been less than 1% (which includes the large slippage of a stop), then you could buy at a lot worse places.

No actually, I didn't miss that bit. And it hasn't changed my opinion that there are far better strategies than trading a method that's a losing strategy most of the time.

But anyway, I can see you've put a fair bit of thought into this strategy and you're comfortable trading it. I wish you well with it.

[brty]

Hi Bunyip,


I've never heard of Jim Rogers,

Umm, your a trader??

A google search will help you find out about him. Nothing wrong with a little education.

Who said my strategy was not putting the percentages in my favour?? Enough research and you come up with strategies that don't seem to make sense to most, but have a positive expectation.

You will also notice that I stated it almost set off my buy, it didn't

brty

[bunyip]

Hi Bunyip,



Umm, your a trader??

A google search will help you find out about him. Nothing wrong with a little education.

Who said my strategy was not putting the percentages in my favour?? Enough research and you come up with strategies that don't seem to make sense to most, but have a positive expectation.

You will also notice that I stated it almost set off my buy, it didn't

brty

I'm sure you're not suggesting that someone is not a trader unless he's heard of Jim Rogers!

I don't think you're going to convince me of the merits of your style of trading. And I doubt if I'll convince you of the merits of mine. So on this one we might just have to agree to disagree.

But anyway, since I'm always willing to look into different trading ideas, and since you seem to rate this Jim Rogers bloke so highly, I'll check him out on Google and see what I think.

[korrupt_1]

The overall trend was down (strongly)... so it was a high risk trade... but given that it did bounce off $1.65, I can see where btry is coming from, it's very tempting to enter the trade as it did bounce off that level 3 times in the past 6 weeks... the following day after the support level was hit, OZL closed higher - 3 times... (hindsight is a wonderful thing)

To play this long setup, one wouldn't risk too much - maybe half what you would normally on this trade - as you're trading against the trend - and intial targets would have been around $1.80... To make this a worth while trade, stop loss would need to be set at no less than $1.50.

Unfortunately, the following day it gapped down and stops would have been taken out... I guess that's the way the cookie crumbles - and the reason why you have stop losses.

I'm with bunyip on this one... if it's trending down,.. look for short setups... more likely to succeed... Although going long off $1.65 had potential of being a winner, it feels like bottom picking... and you know what happens when you pick bottoms... smelly fingers... :p

[brty]

Bunyip,

You don't know what my style of trading is.

Perhaps the following will help you understand who Jim Rogers is..

http://www.bloomberg.com/apps/news?pid=20601087&sid=aFtZT.ckIIV8&refer=home


Rogers Bets Against U.S. Investment Banks, Housing (Update1)

By Saijel Kishan and David Clarke

Oct. 31 (Bloomberg) -- Jim Rogers, co-founder of the Quantum Hedge Fund with billionaire George Soros, boosted his bets against U.S. securities firms because of their salary ``excesses'' and money-losing investments.

Rogers said he increased his year-old short positions in the past six weeks in U.S. investment banks, using exchange-traded funds and bets against individual companies he declined to name. Stocks in the industry, which pays too much in bonuses, may fall as much as 70 percent in a bear market, he said.

``You see 29-year-olds on Wall Street making $10 million to $20 million a year, and they think it's normal,'' Rogers, 65, said in an interview in London today. ``There have been lots of excesses,'' said Rogers, chairman of Beeland Interests Inc.

I find it difficult to understand how someone who has been trading for years, read over 50 investment books, and often quotes different 'supertraders', does not know whom Jim Rogers is.

korrupt_1,

There are many good sayings and beliefs about the market, you just need to test them to see if they are true or not.

I have a rule in my trading that is completely against market axioms. "Take outsized gains". It works for me and it works far better than a trailing stop would in the same situation (from my experience).

brty

[jeflin]

Jim Rogers was confident of two approaches - investment in China and commodities.

With both markets' decline, Rogers must have been offloading some "merchandise" over the last few weeks.

[martraci]

anyone who says they are going long profitably on the asx with little or no leverage (i mean considerable gains; not equivalent to the interest of your dollarmite acount) at the moment is full of it.
dont worry your not the only one, just hang in there

[bunyip]

Bunyip,

You don't know what my style of trading is.

Perhaps the following will help you understand who Jim Rogers is..

http://www.bloomberg.com/apps/news?pid=20601087&sid=aFtZT.ckIIV8&refer=home


I find it difficult to understand how someone who has been trading for years, read over 50 investment books, and often quotes different 'supertraders', does not know whom Jim Rogers is.

korrupt_1,

There are many good sayings and beliefs about the market, you just need to test them to see if they are true or not.

I have a rule in my trading that is completely against market axioms. "Take outsized gains". It works for me and it works far better than a trailing stop would in the same situation (from my experience).

brty

'Take outsized gains' eh? And your system suggested that OZL could have been a buy at $1.65 ........ downtrending stock, downtrending sector, downtrending market. Hmmmm, OK - good luck with that strategy!

Seems like Jim Rogers has been making 'outsized gains' by shorting bearish stocks in the bearish financial sector in the bearish US market.

Fifty investment books? I didn't claim to have read even one investment book, let alone fifty. What I said is that I have fifty odd trading books in my library. That's trading books, not investment books. There's a substantial difference between the two. For example, 'Dave Landry On Swing Trading' and 'The Warren Buffet Way' are like chalk and cheese. None of the books I've read made mention of Jim Richards. Then again, none of them made mention of dozens of other gurus who no doubt exist in the financial world, many of whom neither I nor you are likely to have heard of.

[brty]

Bunyip,


None of the books I've read made mention of Jim Richards.

Neither have any of the books I've read.

However Jim Rogers is who you state you have never heard of. Perhaps you have heard of George Soros?? or the Quantum Fund??, then again maybe not.

You state one type of trading as if it is the holy grail. If trend following is the only methodology that is so sure fire can't lose, then can you explain why Richard Dennis closed down his second fund with large losses, 15 years after closing down his first fund with a similar performance.

You do know who Richard Dennis is, don't you??

brty

[bunyip]

Bunyip,



Neither have any of the books I've read.

However Jim Rogers is who you state you have never heard of. Perhaps you have heard of George Soros?? or the Quantum Fund??, then again maybe not.

You state one type of trading as if it is the holy grail. If trend following is the only methodology that is so sure fire can't lose, then can you explain why Richard Dennis closed down his second fund with large losses, 15 years after closing down his first fund with a similar performance.

You do know who Richard Dennis is, don't you??

brty
Jim Rogers is, of course, who I meant to say. None of my books mentioned him. Nevertheless, he's clearly an investor of repute and considerable ability, and his shorting exploits in those bearish US financial stocks would have made him a lot of money recently.

Indeed I have heard of George Soros and the Quantum Fund.
As for Richard Dennis - I remember reading somewhere that he's reputed to have made 200 million dollars with the trend following system he and Bill Eckhardt taught to a group of traders dubbed 'The Turtles'. But apart from that, I can't speak for him.....I suggest you direct your query to the man himself, or someone who's qualified to speak for him.

There are hundreds of gurus in the financial world, some of whom are known to me, others who are known to you. Neither I nor you nor anyone else can know of every one of them. That doesn't prove or disprove we are traders, nor does it prove or disprove how knowledgeable we are. Nor does it say anything about our trading abilities.
I'm not interested in who has heard of which guru. A discussion of gurus is off topic in this thread.....if it's gurus you want to discuss then you can always start another thread to that effect.
This thread was instigated by a newcomer who copped a mauling by trading against the trend of OZL. I don't have any holy grail to offer him. I don't believe in holy grails, but I do believe in trading a system that gives you an edge in every trade. My advice to Master82 is to stack the odds in his favour by trading with the trend, not against it. Doesn't work every time. But it works more often than not, and puts you into trades that sometimes turn out to be huge winners that reap hundreds of percent profit.
If you or anyone else wants to disagree with me on that, no problem.

[nunthewiser]

Paddle your own canoe ..... float your own boat...........tread your own path

all these highly paid mouthpieces and market opinions only as good as there next guess and will change that the moment they look like there wrong.

luv nunthewiser

[zetor]

I AM NOT NEW AT ALL THIS STAFF,OF BUYING AND SELLING SHARES. I AM A INVESTOR
HAVE BEEN OVER THE LAST 15 YEARS,SO I AM LONG TERM BLUE CHIP STOCKS AND A FEW SECOND STOCKS HOLDER OVER THE YEARS,BUT THE AMOUNT OF MONEY THAT I COULD HAVE MADE OVER THE YEARS BY SELLING STOCK THAT I PERSONALALLY THOUGHT THAT HAD A GOOD RUN,AND THAT I HAVE HELD TO FIND THAT MY PROFIT HAS HALFED OR MORE.EXAMLPES ARE :
OPTUS SHARES FREE BY MAYNE NICK WHENT TO $7.00+ DOLLARS
SOLD AT ABOUT $5.30,STILL A GREAT PROFIT, $7.00 DOLLARS WOULD HAVE BEEN BETTER.
TLS BOUGHT FIRST FLOAT WHENT $ 7.00+ DOLLARS
SOLD AT $5.00 ,STILL NICE PROFIT,$ 7.00 WOULD HAVE BEEN BETTER
NAB BOUGHT 12.30,WHENT TO $46.00 DOLLARS
SOLD AT 25.50 STILL A NICE PFROIT,BUT &46.00 WOULD HAVE BEEN BETTER
AND SO THE LIST GOES ON.
SO WHAT IAM I SAYING IS DON'T LISTERN TO YOUR BROKERS AND ALL OTHER PEOPLE THAT SAY HANG ON TO THE STOCK ITS GOING TO GO A LOT HIGHER YET.
THIS MAKES ME WOUNDER IF SOME OF THE BROKERS WHO SAY THIS AND OTHER PEOPLE IN THE SO CALL KNOW ,HAVE ACTUALLY GONE LONG IN THE STOCK,AND WHEN THEY DOWN GRADE A STOCK,THEY HAVE GONE SHORT ON THE STOCK.
I HAVE ALLWAYS BEEN WORRIED ABOUT THE CAPITAL GAINS TAX THAT I WOULD HAVE TO PAY.SO AFTER 15 YEARS INVESTING FROM NOW ON IAM NOT GOING TO WORRY ABOUT CAPITAL GAINS TAX.IF I THINK A STOCK HAS HAD A GOOD RUN,I FROM NOW ON WILL TAKE APART PROFIT OR A FULL PROFIT, AND IAM NOT LISTERNING TO ANYONE ELSE.SO THERE.
AS A SMALL INVESTOR, YOU ARE BEING CONED IN A BIG WAY BY ALL THESE SHARK'S OUT THERE.

[rub92me]

zetor, welcome to the forum, but FFS hit the 'Caps Lock' key before you post next. Thanks.

[zetor]

sorry,to many xxxx's,must go to bed.

[trillionaire#1]

OZL ,like the majority of this sector has been declining for a while now ,i notice this stock reached $1.93 today,im sure thats pissing you off now!if we could all have a crystal ball ,eh?

[fenis]

I bought ZFX at $3.34 equivalent not to trade but as a long term 'fundamental' investment and I just got out at $1.60 (about a 53% loss). I invested 4.8k so lost 2.5k lol. The reason I bailed and didn't stick to holding long term is because I think we are in for a serious near depression as I believe the current 'credit expansion' system in the US is flawed and doomed to failure - so I'm getting out now while i can. :)

That 4.8k was half my saved capital and I'm only 23 and have a good job so I don't mind a little hard lesson learnt!

[apra143]

Interesting stuff regarding money management in this thread. Sounds to me like something that all beginners (like me) could benefit from.

Great way to minimise wipe outs while you are still learning and building confidence.

Money management = perhaps the most important thing for traders?

[mazzatelli1000]

Interesting stuff regarding money management in this thread. Sounds to me like something that all beginners (like me) could benefit from.

Great way to minimise wipe outs while you are still learning and building confidence.

Money management = perhaps the most important thing for traders?

One of the most important things
If you dont also focus on good setups, entries, exits then it'll be a struggle still.

I'd say for me personally, keeping my emotions in check has the top priority - and this can be helped by money management

[posh]

Bought 10000 OZL at 1.65 yesterday, sold today at $1.50 - shocking :banghead:

I sold like any newbies would in panic - maybe I should just hold OZL and wait for next week, I don't know I just lost control - all I wanted to do was sell, sell and sell to cut losses.

The market is too volatile for the beginers at the moment, I think I should sell my portfolio and sit on the sideline until condition improves.

why the hurry? just hold on to it for a while. my trades in the past (i'm new too) have gone down in the day or two after buying but then i sell in a week's time and make a profit.

[posh]

also i've been told ozl has good potential for long-term buyers. i'm just not willing to cut in anymore after it's gone up that much.

[Nyden]

May I ask what appeals you guys to OZL? It's just got me curious as to why this is such a heavily traded stock ... and more importantly, why so many self-proclaimed beginners trade it?

Is it purely the volatility / chance for a quick-gain, or a magic belief? There are far better positioned resource companies in Australia - with far better diversification (BHP, for example); so - why?

[posh]

One of the most important things
If you dont also focus on good setups, entries, exits then it'll be a struggle still.

I'd say for me personally, keeping my emotions in check has the top priority - and this can be helped by money management

i agree, if you can't keep your emotions in check, you money management won't be much better.

[happytrader]

May I ask what appeals you guys to OZL? It's just got me curious as to why this is such a heavily traded stock ... and more importantly, why so many self-proclaimed beginners trade it?

Is it purely the volatility / chance for a quick-gain, or a magic belief? There are far better positioned resource companies in Australia - with far better diversification (BHP, for example); so - why?

Hi Nyden

This particular stock has excellent liquidity and premium in the ETO market. For example If you had bought the stock for around $1.76, you would have been able to receive approximately 13.5 cents at a strike price of $1.80 with a 30 October expiry. That means that if you bought 10,000 shares at these prices you would have 10 contracts which would provide you with a premium or rent of $1300 for just over a month. If the stock should fall in price you are still entitled to keep the premium as well as the stock which would cover some of the downside risk. If the stock continued to rise past your strike whether it is a win or a loss is really up to ones own interpretation after all you could do it all over again.

Cheers
Happytrader

[Glen48]

I guess your stop should be 5% over 10 K and 10% under that make it hard if you have a 100K
Have a look at LNC you may get your money back.
Can't see you working as wall st banker they would have let it slide and then rang George for help got a Golden Parachute and new job under a different name working a stop go sign for awhile until the dust settles.