my trading strategy and risk management# Stock
p*t
1 楼
On a warm summer evening, I'm feeling bloggy so I'll write some reflections
here. After years of trading, I've developed my own style of trading. Here
are some core strategies:
-know what you play. I never play stocks that I don't understand. A rule of
thumb is, if the Annual Report (10k) is more than 100 pages, I would pass.
10k for companies like BAC, AMZN,.. are as thick as big books. There is no
fucking way for small retail trader like me to have the time and resource to
fully understand the business. For most stocks I traded, even for very
short term trade, I read the company's 10k, or latest 10Q.
-know what you can trust. I focus more on balance sheet than income
statement. It's more difficult to make fraud on balance sheet, particularly
cash in banks and debt. That's the easiest part to audit. The accounting
rules for recognizing revenue/costs are so complex and have tons of
loopholes to cheat.
-know your trading time-frame. When i start a position, the 1st question I
ask is, what's the time frame of this trade, several hours, days, weeks or
months. I never hold a position more than half a year. Yeah, I'm not a long
term investor, but a trader w/ investor's mind. The time-frame dictate how
large position I will open, the price variation range I can tolerate. When
the time limit or price target hits, close position w/ discipline.
-don't gamble. I never hold my position through major events/news/earnings.
Never played ER. I only play anticipation/reaction to the news/events. It
only take one mistake to ruin your portfolio if you gamble.
-no money is too small. People on this board laugh at the little money I
made from those small trades. I'm totally fine w/ that, and actually feel
proud of it. Small trades add up. I care about consistency and reliability.
I intentionally keep my each account small, so that I always get the sense
of hunger instead of complacency. In fact, small size of accounts and small
trades make capital usage more efficient and yield higher % return.
What trading amazes me is, I never fail to learn new stuff. For people
working in cubes, the mindset is "TGI Friday". For trader like me, it's "TGI
Monday". Now you know I just love this game. hehe...
PS. post a short-focus account record in this epic bull market.
here. After years of trading, I've developed my own style of trading. Here
are some core strategies:
-know what you play. I never play stocks that I don't understand. A rule of
thumb is, if the Annual Report (10k) is more than 100 pages, I would pass.
10k for companies like BAC, AMZN,.. are as thick as big books. There is no
fucking way for small retail trader like me to have the time and resource to
fully understand the business. For most stocks I traded, even for very
short term trade, I read the company's 10k, or latest 10Q.
-know what you can trust. I focus more on balance sheet than income
statement. It's more difficult to make fraud on balance sheet, particularly
cash in banks and debt. That's the easiest part to audit. The accounting
rules for recognizing revenue/costs are so complex and have tons of
loopholes to cheat.
-know your trading time-frame. When i start a position, the 1st question I
ask is, what's the time frame of this trade, several hours, days, weeks or
months. I never hold a position more than half a year. Yeah, I'm not a long
term investor, but a trader w/ investor's mind. The time-frame dictate how
large position I will open, the price variation range I can tolerate. When
the time limit or price target hits, close position w/ discipline.
-don't gamble. I never hold my position through major events/news/earnings.
Never played ER. I only play anticipation/reaction to the news/events. It
only take one mistake to ruin your portfolio if you gamble.
-no money is too small. People on this board laugh at the little money I
made from those small trades. I'm totally fine w/ that, and actually feel
proud of it. Small trades add up. I care about consistency and reliability.
I intentionally keep my each account small, so that I always get the sense
of hunger instead of complacency. In fact, small size of accounts and small
trades make capital usage more efficient and yield higher % return.
What trading amazes me is, I never fail to learn new stuff. For people
working in cubes, the mindset is "TGI Friday". For trader like me, it's "TGI
Monday". Now you know I just love this game. hehe...
PS. post a short-focus account record in this epic bull market.