For 2006 I have been reasessing my investing ideas to try to be more successful.
Last year I took small profits from a wide range of shares and missed out on some huge rises, made some large losses on the duds by not getting out soon enough-then some recovered!! one or two have gone bust and one or two like NLR have rewarded me well and kept me solvent. However some of you are obviously doing far better than me so I thought I'd change methods--any tips welcome. This year I'm going to look for shares with a smaller spread and limit the number so that I can buy say 50k then move in and out as the sp changes-I don't feel confident with spreadbetting but this seems the buy method closest to it-if it pays off I shall have to pay the CGT without complaining.
Lots of methods coming in
1 Good Stock Selection-research buy and hold. instinct and luck applies here too
2 Capital Preservation-by using stop losses.
3 Instrument selection--CFDs and Spreadbets
4 Buy high risk shares for possible higher rewards.
5 Position sizing- hold enough to trade profitably.
6 Margins--choose shares with a narrowish spread or you wait for a big rise before you make any profits.






Is this a good summary Gausie?

I have only been investing in shares since October 2005 and my trading method is this. I tend to wait until a share price has risen at least 10% before jumping on, this avoids any what I call noise (price variations). Also I prefer that the share has bottomed out for a couple of weeks and that there is news to justify the rise in value.

To avoid jumping off to early and loosing any potential further gains or loosing gains already made I set a Stop Loss 10% below what I have made so far. The Stop Loss is set for say 1 week so I can move this level upwards to protect further gains made.

Remember that with any gains there will be profit takers along the way, so make sure these people don't make you jump off to early. The Victoria Oil and Gas shares are a good example, look at the steps where the drop seems to last 5 days before the price goes up again.

If you are dealing in penny shares (under 50p each) then it may be a good idea to increase the 10% to 20% (perhaps even 30%) because these shares are more volatile.

Another trick is to search Google for companys who has issued Profits warnings so 6 months earlier as companys seem to recover after about this time. But only if no other profits warnings are issued later on.

I also check www.britishbulls.com but again this site seems to work better for higher priced shares, it is useless for penny shares.

I also find a weekly magazine such as Shares useful for trading ideas and news.

These are my tips from my very short trading experience and welcome any thoughts and any possible flaws in my ideas.

Take care of the losing positions, i.e. lob them, and leave the winners to run, raising a trailing stop as you go. It's simple, but will inevitably make you money even if less than half of your picks go your way.

Forget concentrating too much of a holy grail at picking things. That helps, but "the market can stay can stay irrational far longer than you can stay solvent" - great quote and don't forget it (thanks to Hil for bringing that to my attention again)

Al
;-)

Oh, and get up early to read the news at 7am every day without fail! ;-0

Look for companies whose business you can understand fully.

Like most people, I work for a living and know my own industry well, however many of the companies I invest in are from industries that I do not know in as much detail. I therefore try to go for smaller companies with reasonably simple business plans, so I can work out what is going to affect their profits.

How do I identify good candidates? Personally, I look for recent news releases, which often provoke a jump in the share price and put the company among the top twenty in 'daily risers' lists. I then read the news, if it takes my interest, I research the company and potentially invest. Anything that I like and can understand, I keep on my watchlist. A recent example is VOG, which you mentioned earlier.

In addition, I use chart analysis to work out when a good time to buy/sell would be. My preference is for a combination of Bollinger Bands and RSI. Things like moving averages (to see overall trend up/down) and volumes also help.

Oh... and don't get sentimental with shares - if its going down and down, it may never bounce. Better to take the loss on the chin and invest in a better company.

AT77
I like to add MACD, FAST STOCHASTICS and OBV + yours to help time entry / exit points

I'm a simple bloke and my trading starts from the following questions.
What products are the parents at school and the blokes in the boozer talking about?
Who then, will profit from that?
Which shops are full and what are people buying?
When I work out which sectors are profiting from it, I look for a player with a low P/E and a decent dividend if possible. generally these will rise or be swallowed up by another player who is doing well from any upsurge as they try to consolidate their position.
Alan

cheers all-I seem to use a fair amount of your methods but give in to boredom too early and lob them as big A says. no good at the technical stuff so I rely on this bb for that.

Get yourself on a course.

Big Al's approach makes sense - If you're a racehorse owner and some of your horses are winning whilst others are losing you obviously wouldnt sell the winners and keep the losers.

I use a slightly different approach - when I enter a position I set a target price and a stop loss price. If I add to the position I set new targets and stops, and often re-assess my existing target and stop at the same time. Plan the trade - then trade the plan.

Too many people focus on when and how to get in and have no idea of when and how to get out.

Check out www.glomtc.com - they run excellent money management courses - and the money management aspect of trading or investing is more important than the stock picking side. It takes an investing maturity to realise this - but once you've grasped it your whole style changes for the better.

Gausie

Gausie the below comment from you is just hiliarous....shows your lack of understanding of how you interpret company RNS.

"They'll be bust within a few months".

If you took off those rose tinted spectacles for a moment and stepped into the real world you would see that DMR is a cash shell with 400-800K cash....16m worth of stone deposits and about to carry out an acquisition or reverse takeover subject to the factory sale. A new company will then be formed.

If there isn't a company at the moment then how the hell Gausie can it go bust. I would advice any investor on moneyam to take anything on any stock that Gausie may write with a pinch of salt. The poor bloke in his aura of deramping forgot to read the recent RNS's.

SueHelen - you appear to be cross-posting in contravention to BB Rules and standard netiquette.

Suggest u cease and desist unless you want to reduce your number of login names to three figures or less.

G

Gausie......getting all touchy now......Ian will be more than happy to verify that I have only have and always have kept the one login ID.....not scared of the likes of you so why have more than one ID. I see you have run out of sentences to write so you posting pretty pictures on my thread now.

Someone would have thought you've made your million now from the stockmarket the way you waste your time pouncing about.

Official to say Gausie has run out of sentences to aid his deramping.....bad luck....did think of you as dumb widt...always have.

I would recommend spreadbetting, and actually I reckon it is lower risk and cheaper than buying shares. Consider that you can diversify into currencies, commodities and indices as well as shares - thereby reducing risk. Also you can go short as well as long (what are you going to do with your share investments if markets start falling across the board - apart from sell everything). Added to that there is no CGT or stamp duty. You can also order trades in advance so that only when the sp hits your order level does the trade go live, so you let the market come to you.

In terms of risk it is easy risk manage - you can balance out the leverage by betting less (I bet so that the maximum potential loss on each trade is 4% of my bank-roll, and I limit my number of open or ordered trades to 12). You can also put in automatic stop losses, some of which are guaranteed.

Frankly I now much prefer it to buying shares.

regards
gk

I now know how it feels to be savaged by a dead sheep.

Swellen - why hijack this thread, which has all the makings of a fine educational and interesting strategy focussed discussion, when the board is already littered with your misinformed random jottings and lengthy cut-and-paste twaddle?

I Suggest we move this back to either here or here and let these good folk get on with making money.

Gausie

I've squelched you now Gausie......it's not gonna do me any good reading any of ur posts.....after seeing your lack of knowledge now about things it's not worth reading anything you write.

Happy trading....if you every get time.

Happy pouncing around....if that is your new profession.

Try bringing the big boys in the dock.....

Gallick - agreed - it's worth looking at other instruments beyond shares. You suggest spread bets, but it's also worth looking at CFDs and also futures contracts and forex.

You also raise an essential money management issue with your 4%. Personally I see 4% as too high, and would recommend 2% or 3%. However, it is certainly an essential component of a well thought out strategy.

Moneyplus - perhaps you could edit the header to summarise the different components that are being discussed within the thread, all of which combine to form a proper strategy.

1) Stock Selection
2) Instrument Selection
3) Capital Preservation
4) Risk/Reward
5) Stop loss management

G

I guys, i my self am a youny investor twenty four of age, have been interested in shares for quite a long time approximatly for about three years now, my beleif is that in order to make money you must know what its like to lose it and learn from it in the past i have invested in colt telecom, thus and intec the price went down and just sat on them hoping they would recover, thinking back i was young and nieve.

For the past tweleve on the net i have been researching and watching seeing trends of shares with there movements , and seen alot of people caught out with the hype of some of the bullitin boards.

What ever you do research is the key, i have been adopting a serve 7% stop loss cutting the losses and riding the bullish shares and never getting attached to any share, which were people go wrong

All traders lose money at some point, cut your losses and move on, always go with market sentiment, there is opportunity every were you look but not every one can see it.

Recently i purchased vog at 100p and stuck to my guns when the stop loss kicked in having sold at 133p made a nice profit, what i should have done is bought back in when they rose this is inexperience but you learn from it.

In this game never look back you only lose further opportunites which may arise, and hey banking a profit is better than a loss.

>> gausie

Fair point you could reduce to 2 or 3% per trade, but that means that you may have up to 25 trades open or coming up. IMHO that is too many to keep track of. The 4% level would risk only 48% of your entire portfolio if everything went belly up.

rgds
gk

Thanks for the interest all. I see this morning I've boobed again--I bought ADA on instinct and positive research. share price static -company ignored-well below the float price----got bored with it sold out for a thumping loss---and now it's coming good! Buffett was right if you find a good company tuck it away!

Try not to get carried away on the mood of a thread and like big Al says always know your exit strategy before you enter a trade. Your new strategy via your opening post is a good one in that 50k in a tradeable liquid stock can make you money but always remember to trade with the underlying trend.

If you have made money and are uncertain about whether to exit then take profits on half your holdings, set your stop loss at your entry point on the other half and concentrate on something else

The main warning from me is to be very careful not to get sucked in my posters like suehelen. They give themselves credibility by copying and pasting lots of `bumf` from elsewhere but they are out and out rampers. For example look at this thread which is very typical of this person DMR

Gallick

"Fair point you could reduce to 2 or 3% per trade, but that means that you may have up to 25 trades open or coming up. IMHO that is too many to keep track of. The 4% level would risk only 48% of your entire portfolio if everything went belly up."

Hmmm not sure that's right - but this is why no single part of a strategy should be taken in isolation.

Suppose, for example, you were to consider buying BT.A at current levels.




Suppose your stop was 216 and your target 235. At an entry price of 220, you'd be looking at risking losing 4 points (220 minus 216) against gaining 15 (235 minums 220) - roughly 4 to 1 risk reward. If you decided this were acceptable and were trading normal shares, then with a pot of, say 10k, and a maximum risk of say 2% of your capital, you would be prepared to lose 2% of 10k= 200. If you're risking 4 points for 200 then you're sized at 50 a point - ie 5,000 shares. Without margin, these would cost slightly more than your entire pot - and you'd have one share to watch.

On a margined account (eg CFD) with, say 10%, then the exposure is the same, but you'd be able to hold 10 similar sized positions, so you'd be watching 10 shares.

I'm not sure where your 25 comes from. Is that spread betting? or very high margin?

Moneyplus - perhaps you might add "Position Sizing" and "Margin" to the bullet list, under money management.

Gausie

How many of you sell in May and come back in October? always seems a very dull time through the summer months. Also it seems very often a good idea to sell just before results with most companies as no matter how good they are the sp is always knocked back.