| As I study the markets daily, I find a unique trade or | | | | numerous advantages, on top of the fact that the |
| see a stock that looks beautiful, technically, on one | | | | markets are a passion of ours wanting to be actively |
| of my numerous monitors. Occasionally, I find myself | | | | involved in them full time. We hold positions for |
| curious how a Warren Buffet, or some other master | | | | periods ranging from intraday to 3months. Although |
| in the market, would view it. I then tell myself it is | | | | we are short term traders, we still have long term |
| irrelevant; our style of capitalizing off the markets is | | | | outlooks on stocks as well as long term price targets. |
| completely contradistinctive to Mr. Buffet and most | | | | For example, we have had a long term outlook on |
| investors. One of the many lessons and rules of | | | | Google since December of 2005. We have not |
| playing the markets is to comply with your technique. | | | | bought and held our position, but rather traded |
| At Elite Trading & Speculation our style has | | | | around it since 2005. Let's compare our gains based |
| more of a characteristic of a trader. On the contrary | | | | on a $25,000.00 investment, to gains that would |
| to many opinions on trading, we find this trait to | | | | have been made if we just bought and held our |
| have such a great paramount over the classic buy | | | | position. |
| and hold strategy. I am not completely opposed to | | | | Our entry price was $412.50 in December of 2005. |
| this casual technique of buy and hold, but I have | | | | Go to our web site to view a chart of our entry |
| found short term trading to be superior in allowing us | | | | points and exit points. Our rough average of holding a |
| to manage risk and returns. With recent market | | | | position is a little over 2 months. At today's current |
| volatility and short term trading in general, this | | | | prices, by trading the position with $25,000.00 we |
| technique has become more interesting and admirable | | | | have a gain of $32,899.00 a 76% return. If we would |
| to the novice and retail investor. | | | | have bought and held using the classic buy and hold |
| First, let us remember how the classic investing | | | | technique; selling around today's levels we would be |
| technique works in general. A buy and hold portfolio | | | | sitting on a gain of $15,450.00 a 62% return. This |
| needs to be diversified; this helps control risk and | | | | only shows that trading can have a superior |
| helps maintain the portfolio through market cycles. | | | | advantage if executed correctly! At the same time |
| The portfolio should contain quality stocks and | | | | of capitalizing on this stock, we have controlled our |
| dividend paying stocks. Speculation is usually not | | | | risk. How have we controlled our risk? First of all, we |
| included in a classic portfolio; however more | | | | constantly research the up to date fundamentals, |
| aggressive investors do have a percentage of their | | | | news, the streets outlook, and conference calls. All |
| portfolio in speculation, but a very small percentage. | | | | these variables shows us our long term outlook, but |
| Fundamentals of each stock are very important. Most | | | | one of our most important tools that we use for the |
| classic investors base 100% of their decision on | | | | short term entry and exiting points is the chart |
| fundamentals and ignore the technicals of the charts, | | | | technical's. If there was to be a turn in the outlook at |
| although technical techniques do exist on the long | | | | any point we could have quickly closed out our |
| term view and prove to be very effective if | | | | position, and waited for a pull back on the charts and |
| followed. The more advanced investor usually utilizes | | | | at that point reevaluate the stock. The saying is a |
| options and hedging techniques to manage risk, | | | | trader is always on the edge worried and stressed, |
| however the novice and retail investor lack | | | | but on the contrary I feel more comfortable knowing |
| knowledge in these techniques, therefore they leave | | | | I am on top of my research and if the markets |
| this risk controlling variable out of their investment | | | | turned I could quickly turn with them and profit from |
| plan. The long term investor does and must trade, | | | | the downside. If we would have shorted this stock |
| but they do this on a longer term basis. Once a | | | | on the pullbacks we would have almost doubled our |
| component of their portfolio makes a great return | | | | gain. |
| over a long period of time the investor will either | | | | Diversification in trading is not an important variable. If |
| take some profits by selling a percentage of the | | | | technology is working at the present time, that is |
| position or swap into another stock. There are many | | | | what we put to work. If the market cycle changes |
| more variables that go into classic investing, but by | | | | we could quickly reposition into new stocks that do |
| going through it generally will tell us this technique can | | | | well in that type of cycle. In doing this, your full |
| work; history also tells us this technique works | | | | portfolio is always working for you; as opposed to |
| successfully from famous investing gurus. This | | | | classic investing diversification is what keeps you a |
| technique may work well and satisfy many market | | | | float; when one part of your portfolio is not working |
| players, but may put many retail and novice investors | | | | the part that is working helps you stay in the game. |
| obliviously at a disadvantage. One con is the amount | | | | One could have debated years ago that trading is |
| of capital it may take to realize gains. Starting out | | | | not worth it due to brokerage fees. That debate is |
| with little capital can be frustrating especially when | | | | obsolete today with discount brokerage firms such as |
| the market is in a bearish mode for a lengthy period. | | | | E-trade, Trade Station, and so on. These firms |
| Most classic investors do not play the market in | | | | provide trading at deep discount fees. One could |
| every aspect. They usually lack the knowledge of or | | | | have also debated years ago that you would need a |
| find it highly risky shorting stocks. When the market | | | | professional to trade the markets, and you would |
| makes a huge correction, it always scares off a big | | | | need to be in the trading pits all day. Today with the |
| percentage of classic investors out of the market | | | | internet we can make trades at lightning speeds, and |
| indefinitely; although the correction could have been | | | | as far as information goes that is also delivered |
| used as a huge buying opportunity and inevitably the | | | | today at lightning speeds through the internet. Not to |
| market does go back up after a correction. If they | | | | mention CNBC, and Bloomberg Television, these |
| would overcome their fears and hold their positions, | | | | networks provide a great wealth of information, |
| they would go back up in parallel with more gains | | | | debates, interviews, and breaking news. Benefiting |
| from new positions bought in the lows. The | | | | from options is also a advantage to a short term |
| physiological effects are hard to bear for some when | | | | trader. There are numerous complex and also fairly |
| a considerable amount of an investor's capital is lost. | | | | simple strategies to insuring your short term positions. |
| A retail or novice investor, working a classic day job | | | | This is a general overview of investing and trading; |
| watching the market on a casual basis, may lack | | | | we could study the technique of trading, investing, |
| discipline. This does not mean investing or trading | | | | and the markets for many life times. Bottom line, the |
| cannot be done part time, but many casual players | | | | two forms of capitalizing off the markets described |
| become torpid as time goes by. This is a huge set up | | | | here will work; it is up to you to find your niche and |
| for complete failure. | | | | what works best for you. Once you discover your |
| Why do we use the edge of a short term trader | | | | style, study it and execute it with passion. |
| here at Elite Trading and Speculation? We find | | | | |