[SJ] SJ and Stock Trading/Investing

[Ozz]

I know people who traded stocks after the price has undergone a dramatic collapse and the company was flirting with bankruptcy. While it actually works, it would have stressed the heck out of me. There must be a strategy that works for our fellow SJ.

So my question is: what are people's stock trading/investing strategies? Fundamental analysis? Technical analysis (I am guessing it more N than S)? Trade with your guts? How do you manage the tendency to second guess yourself?

 

[LostInNerSpace]

This I understand, or maybe not ...

 

[Ozz]

This I understand.

As you are an INTP, I am assuming you are running your own proprietary trading program that makes decisions based on some kind of statistical inference model on hundreds of variables?

 

[LostInNerSpace]

As you are an INTP, I am assuming you are running your own proprietary trading program that makes decisions based on some kind of statistical inference model on hundreds of variables?

That's the plan eventually. But not hundreds of variables. It's best to keep the number of variables to a minimum to avoid curve fitting. I already a couple of automated systems that preform quite well which have only four or five variables, but don't plan to sell them.

 

[Habba]

Well, I've never been into stock trading, but if I would, I would do the following:

- Try to find few cheap stocks that have chances to become very expensive. That way if they drop, I only lose little money, but if they rise, I gain a lot.

- Distribute my money over several stocks. Gambling is not a good idea. Distributing your money here and there you can sure your profits.

- There's no instant wins there. It takes time to get some money, and most likely that money won't be big win. But it's far better idea to have small profits every then and now, than gamble all your money for a quick win.

 

[pure_mercury]

Well, I've never been into stock trading, but if I would, I would do the following:

- Try to find few cheap stocks that have chances to become very expensive. That way if they drop, I only lose little money, but if they rise, I gain a lot.

- Distribute my money over several stocks. Gambling is not a good idea. Distributing your money here and there you can sure your profits.

- There's no instant wins there. It takes time to get some money, and most likely that money won't be big win. But it's far better idea to have small profits every then and now, than gamble all your money for a quick win.

One of the easiest things to do at the outset is buy into a no-load stock market fund. This is what I plan on doing when I have an extra $3,000 lying around.

 

[LostInNerSpace]

- Try to find few cheap stocks that have chances to become very expensive. That way if they drop, I only lose little money, but if they rise, I gain a lot.

Bad strategy. If the stock has bearish momentum it will likely get even cheaper. This was the first trial by fire lesson I learned.

- Distribute my money over several stocks. Gambling is not a good idea. Distributing your money here and there you can sure your profits.

Diversification is a good idea but it does not guarantee profit. Actually, Modern Portfolio Theory will tell you otherwise. They say if you have a sufficiently representative sample of stocks in your portfolio such that the portfolio is market neutral, you can eliminate systematic risk and pocket the difference. MPT assumes people are rational and risk averse. Hog wash. People are risk seeking. This is a recipe for mediocrity if that.

Trading is professional gambling.

- There's no instant wins there. It takes time to get some money, and most likely that money won't be big win. But it's far better idea to have small profits every then and now, than gamble all your money for a quick win.

Right. The better money management strategies out their require taking very small positions and making lots of small profits while allowing for the occasional winner. The key is consistency. It is a very hard thing to do, but deceptively simple. Profit margins are razor thin. That's where my software will come into play. I want to arm traders with the best set of tools around to help them achieve realistic objectives. I'm actually not going to sell trading strategies or financial advise. I'm going to give people the tools to do it them selves. The tools already exist, but I think I can do a better.

 

[Saslou]

I have never really been interested in stock markets but for 5 yrs i did obsess over the currency rates between £ and C$. With help from people in the know, i would look at all the variables and keep an eye on the fluctuations. I really did enjoy this and zoned in so bad. I actually miss it now.

I used to work in a bank so seeing cheques for $18 millions pounds, well i didn't even flinch, they are just figures. I think if i was to get into stocks and shares, again i would view it as the same. It's all a gamble but i would have to analysis all available data i could get my hands on to made a rational decision if to buy or sell. I believe i could make people a lot of cash.

 

[spirilis]

I can say for short-term trading using Technical Analysis, the key is to have a routine with various rules and things to watch and *stick to it religiously*. I'd think SJs would be supremely well equipped to follow such methodologies. And it's fun, because things change over time and you learn as you do so. Each correction and experience is akin to honing one's sword, I'd say.

 

[Ozz]

One of the easiest things to do at the outset is buy into a no-load stock market fund. This is what I plan on doing when I have an extra $3,000 lying around.

I think that work ok at this point in the stock market, remember to avoid those long term market top through.

 

[IZthe411]

Slow and steady growth- I try to buy low, and let it grow. Don't take too many risks.

 

[durentu]

http://www.studyfinance.com/jfsd/pdffiles/v13n1/marshall.pdf

Dollar cost averaging (dca) and value averaging. read the experiment above

or investopedia's comparison

Choosing Between Dollar-Cost And Value Averaging


Don't need to write me own strategy simulator anymore.