Do you always have a limit order going?

[Boho]

What I'd really like is a sell order for when the market spikes suddenly. Then I'd sell an index fund and hold the cash for a while before buying again. But I don't have a sudden-spike detector set up and I just sell my index fund when a certain price is reached. That's a good idea, right? Like, maybe for a once-a-year level spike? As long as you have an alert so you know to start looking for a time to reinvest.

 

[Winemaker]

I have the belief that the market, over the long term, is going up. I have limit orders for buys, which are less than current market prices.

However, that being said, I do believe the markets, and sectors are cyclical. When I feel an investment has run its course, I may, but not always, use a limit order.

 

[MRG]

Boho,
Read them books. Remember that flash crash a few years back. People lost billions because of major market moves and having limit orders sitting in queue.

 

[MichaelB]

I don't think this is about books. With pre-market short selling of OTC stocks and tracking spikes, Boho needs the kind of expertise and specialization that one would find in a technical investors forum. Not really the kind of expertise typically found in a retirement forum community.

 

[Boho]

Boho,
Read them books. Remember that flash crash a few years back. People lost billions because of major market moves and having limit orders sitting in queue.

I think that was like a bug in computer trading programs. Buying low and selling high will always be the thing to do.

 

[MRG]

I think that was like a bug in computer trading programs. Buying low and selling high will always be the thing to do.

Maybe. What keeps that or any other large price movement from triggering your limit orders?

Say you have a limit on equity XYZ for 5% under the current price. News comes out that the "C" levels are all going to be charged with say insider trading. The stock drops 40%, you bought 35% high!

Don't think it will happen? Go looking at some charts. IIRC two years back KMI might be a good one.

 

[Boho]

Maybe. What keeps that or any other large price movement from triggering your limit orders?

Say you have a limit on equity XYZ for 5% under the current price. News comes out that the "C" levels are all going to be charged with say insider trading. The stock drops 40%, you bought 35% high!

I don't currently have long running buy limit orders. I only do it when selling, but I guess something like that could happen there too. Like there's a good rumor, I auto-sell, then the rumor comes true and I wanted that stock but it's too high to buy back. I don't have a rumor filter.

 

[exnavynuke]

The market dropped over 6% on election announcements last year and closed up for the day and has since gained about 13% in less than 4 months.

I don't keep orders open to close out investment positions. When I was trading in my brokerage account, that was a different story. As an investor I don't believe in keeping sell orders (or buy orders) open waiting for a price to trigger as a general rule.

 

[ERD50]

What I'd really like is a sell order for when the market spikes suddenly. Then I'd sell an index fund and hold the cash for a while before buying again. ... That's a good idea, right? ...

.... Go looking at some charts. ...

I'll add to the "look at some charts", but with a twist.

Have a friend pick a dozen random stocks and print out the charts for various 5 year periods (linear scale). Have him blank out the dates. Then have him hand you one at a time - but with a black sheet of paper covering the graph.

Then slowly move the cover to the right, so you can't see the 'future', only past and 'current'. Start marking the places where you think you should buy and then sell. Don't cheat, use ink

I think you may be surprised, maybe not as shocking as this guy, but the same basic story:

-ERD50

 

[Andre1969]

I put in a limit order this morning, but it turned out to be pretty useless. I have a stake in Apple (AAPL) and every time my holdings in it pop $40,000, I sell off 10 shares. I had 290 shares this morning, and needed something like $137.93 to hit $40K. So I put in a limit of $138, which it hit about 18 minutes into the trading session today.


So, now I'm down to 280 shares. And of course, now AAPL is flirting around $140/sh... :-/

 

[exnavynuke]

I'll add to the "look at some charts", but with a twist.

Have a friend pick a dozen random stocks and print out the charts for various 5 year periods (linear scale). Have him blank out the dates. Then have him hand you one at a time - but with a black sheet of paper covering the graph.

Then slowly move the cover to the right, so you can't see the 'future', only past and 'current'. Start marking the places where you think you should buy and then sell. Don't cheat, use ink

I think you may be surprised, maybe not as shocking as this guy, but the same basic story:


-ERD50

http://chartgame.com/main

This site does pretty much the same thing electronically. It picks a random stock, shows you the historic chart (over time) and lets you simulate when you would have day-traded or swing-traded the stock based on price action and the available indicators.

 

[Boho]

In this video, starting at at 3:32, hear Burton Malkiel talking about it being possible to buy low and sell high. He doesn't consider this market timing.

 

[Boho]

This site does pretty much the same thing electronically. It picks a random stock, shows you the historic chart (over time) and lets you simulate when you would have day-traded or swing-traded the stock based on price action and the available indicators.

I have IE 11 and get the message "Chartgame is optimized to work on Chrome 50+, Firefox 49+, Internet Explorer 10+, and Safari 537+.
Please update your current browser to start playing!"

I tried in Chrome and it wants me to sign into my social media. I'll pass for now but I bet I'd be good.

 

[ERD50]

In this video, starting at at 3:32, hear Burton Malkiel talking about it being possible to buy low and sell high. He doesn't consider this market timing.
...

OK, start posting your trades in real time. We'll keep score.

-ERD50

 

[ERD50]

http://chartgame.com/main

This site does pretty much the same thing electronically. It picks a random stock, shows you the historic chart (over time) and lets you simulate when you would have day-traded or swing-traded the stock based on price action and the available indicators.

... I'll pass for now but I bet I'd be good.

Just the kind of confidence that will drive you to the poor house!

-ERD50

 

[Boho]

OK, I tried logging in with Facebook and got the error "You must have 10 or more friends/connections to register an account"

 

[samclem]

I don't think this is about books. With pre-market short selling of OTC stocks and tracking spikes, Boho needs the kind of expertise and specialization that one would find in a technical investors forum. Not really the kind of expertise typically found in a retirement forum community.

And I wonder if there is any expertise of value in the technical analysis/trading sites , either. Oh, they know the specialized lingo they have created for their construct ("see the classic cup and saucer formation here," "this is a one-sided candlestick with a resistance bump," "the stock has exceeded the upper limit of its Bollinger Band, clearly a strong sell signal," etc). What is undetermined is if people who know this lingo and drink the Kool-Aide make more money than a simple buy-and-rebalance approach.

 

[nun]

In this video, starting at at 3:32, hear Burton Malkiel talking about it being possible to buy low and sell high. He doesn't consider this market timing.

Low frequency and lagging the market (not trying to anticipate it) is the difference between rebalancing and what is commonly thought of as market timing.

 

[samclem]

In this video, starting at at 3:32, hear Burton Malkiel talking about it being possible to buy low and sell high. He doesn't consider this market timing.

Why don't you do what he says--set an allocation and rebalance to it? Because that's the only type of "buying low/selling high" that Malkiel is addressing here. Let me know if you read anything that he's written that advocates day trading, swing trading, "technical analysis" (i.e chartist Ouji black magic), etc. Or, come to think of it, just let us know when you read an extensive amount of anything he's actually written. There may be some value in going beyond YouTube and an internet forum.

 

[MRG]

And I wonder if there is any expertise of value in the technical analysis/trading sites , either. Oh, they know the specialized lingo they have created for their construct ("see the classic cup and saucer formation here," "this is a one-sided candlestick with a resistance bump," "the stock has exceeded the upper limit of its Bollinger Band, clearly a strong sell signal," etc). What is undetermined is if people who know this lingo and drink the Kool-Aide make more money than a simple buy-and-rebalance approach.

I joined a site like that, expensive way to lose money! But hey, the guy was entertaining, he'd insult all the paying members(I don't mean little insults either, even 10 years of working in sawmills and logging didn't prepare me).

Much of the advice was buy/sell now! If you missed the 2 minute window in the pre-open, well that trade won't work.

 

[MRG]

I'll add to the "look at some charts", but with a twist.

Have a friend pick a dozen random stocks and print out the charts for various 5 year periods (linear scale). Have him blank out the dates. Then have him hand you one at a time - but with a black sheet of paper covering the graph.

Then slowly move the cover to the right, so you can't see the 'future', only past and 'current'. Start marking the places where you think you should buy and then sell. Don't cheat, use ink

I think you may be surprised, maybe not as shocking as this guy, but the same basic story:

-ERD50

Awesome idea. When you start to see only the past, it gets much more real attempting to predict the future.

I think Graham first used the analogy of Mr. Market being a bi-polar individual. Ben may have been underestimating how bizarre Mr. Market can be.

 

[LOL!]

No, I do not always have a limit order going. I do sometimes use good-for-the-day limit orders.

Multi-day limit orders get pretty stale pretty quickly and are nice way to get taken advantage of. I know Boho won't read about "stale limit orders", but I note this for others who may be interesting the topic.

Instead of such limit orders, I have my broker send an alert to my phone when something I am interested in happens. It could be a price point or a percentage change in one day or something else. Then when I get the alert, I can check out what has happened and whether I want to do anything about it then. This is much much better than a limit order.

 

[MRG]

No, I do not always have a limit order going. I do sometimes use good-for-the-day limit orders.

Multi-day limit orders get pretty stale pretty quickly and are nice way to get taken advantage of. I know Boho won't read about "stale limit orders", but I note this for others who may be interesting the topic.

Instead of such limit orders, I have my broker send an alert to my phone when something I am interested in happens. It could be a price point or a percentage change in one day or something else. Then when I get the alert, I can check out what has happened and whether I want to do anything about it then. This is much much better than a limit order.

I could get behind that technique if I was still actively trading. You're using your brain to analyze what is causing the change.

 

[Boho]

OK, start posting your trades in real time. We'll keep score.

-ERD50

Here's my first day trade. As seen in another thread:

YOU BOUGHT AGILENT TECH INC (A) Processing

It was bought for $51.52. Um...with a settlement date of March 3rd.

Then, "03/01/2017 Sell 100 Shares of A at Market (Day) Filled at $52.0747"

I read on a Fidelity page that "the sales proceeds of fully paid for securities qualify as settled funds." And about an hour before I sold Agilent I sold enough ONEQ (which was fully paid for) to pay the buy price. So there shouldn't be a good faith violation.

Is there a good faith violation? There's not enough cash in the account yet.

I think I'm OK. It would just be strike one.

"Consequences: If you incur three good faith violations in a 12-month period in a cash account, your brokerage firm will restrict your account."

 

[ERD50]

Here's my first day trade. As seen in another thread:



It was bought for $51.52. Um...with a settlement date of March 3rd.

Then, "03/01/2017 Sell 100 Shares of A at Market (Day) Filled at $52.0747"

I read on a Fidelity page that "the sales proceeds of fully paid for securities qualify as settled funds." And about an hour before I sold Agilent I sold enough ONEQ (which was fully paid for) to pay the buy price. So there shouldn't be a good faith violation.

Is there a good faith violation? There's not enough cash in the account yet.

I think I'm OK. It would just be strike one.

"Consequences: If you incur three good faith violations in a 12-month period in a cash account, your brokerage firm will restrict your account."

OK, so about a 1% gain in a day (before fees). Nice, but really not such a big deal considering you had an up day in the general market.

I'm up 1.13% today, on my entire portfolio (not just a 100 share subset), and I've done absolutely nothing (something I'm pretty good at )!

-ERD50