What is a “runner”?

runner

    What is a “runner”?

 

     After you are profitable in a position, many successful short-term traders will book profits on ½ their initial trade and leave the other half to run (runner).  Some people call this “scalping”, which means taking small profits in the short-term.  Leaving a runner and scalping are essential in reducing overall risk in trading.  When you take ½ your position off, you lower your stop to break even on the remainder of the trade to ensure the overall trade is profitable.  If you take a scalp early and trail the rest with a stop at your cost, you are now in a trade you can’t lose (intra-day).   However, if you hold that runner overnight you do have risk of losing money in the overall trade.  There are occasions where stocks will gap down below your stop, on overnight market news.  This is not the norm, but does happen and is part of trading. 

 

     When I take scalps, I will often book ¾ of my trade early  and my risk is now considerably reduced.  In addition, I am more comfortable holding my runner overnight.    Options are a way of leveraging a trade and capitalizing on smaller price movements in stocks, but also have more risk.  The key to a successful trading strategy and methodology is risk management.  If you can reduce risk fast while keeping a runner, your odds of succeeding increase significantly.

 

 

KISS

kiss

KISS is an acronym for the principle “keep it simple, stupid!”

I often use this term in trading to stay focused.  There is so much noise out there, between CNBC and twitter posts,  it is essential to concentrate on the simple things that will help you succeed in trading.  The main focus to KISS, is trading  “PRICE”.   I post many of my charts with just price bars, and very few other indicators.   Why?  Because when you have too much information you suffer from “paralysis of analysis”.  There is always a technical indicator that will tell you to buy, and always another that will tell you not to.   In order to succeed in trading you must have CONVICTION.   If you are looking at too many indicators, you will never have the confidence to succeed.  

Today’s KISS says the market is still strong, and the financials are acting very well.  There is continuous new money flow coming  into the market with the January effect, as this  hated bull market continues to grind higher.  Continue to look for select relative strength in technology (AMZN, GOOG, FB ) and wait for confirmed strength in the banks (GS , C , BAC). 

In addition, I am trying to keep my website simple (KISS) also.  I am looking forward to educating  my followers with my trading methodology and learning and how I can help them with their personal trading  goals when Fitzstock Charts Premium Service(FCPS) launches on January 26th, 2013

Thanks again for all the positive feedback.

David Patrick

Fitzstock Charts, LLC

GREED KILLS

greed

Greed is one of the reasons why 97% of traders FAIL

When stocks hit your target level, you book your profits and move on to the next trade setup.

I had only  3 trades so far this year (AAPL , GOOG & C).  All 3 trades worked well, but Citi was the only runner that PAID(runner +50% Jan 40 calls, from posted entry on twitter)

Now, PATIENCE remains the key.   Everyone wants the next trade, so bad.  You need to stay disciplined and remain patient for the next trade setup(I gave you some this week, in CWUS).

Nobody bats .999, but if you wait patiently for the next calculated setup with defined risk, you will have the odds on your side.  Also, if you are a day trader ,you DONT have to trade everyday.  Take time to study charts and educate yourself on how you can improve on your trading plan.  Lastly, always try to learn from you mistakes.  As one great mind once said, the definition of insanity is doing the same thing over and over again and expecting a different result.      Only you can prevent from going insane.

Patience and discipline pays, and GREED KILLS

 

January effect, earnings and OPEX

sunset

What is the January Effect?  

simple answer    http://en.wikipedia.org/wiki/January_effect

I stated weeks ago, that we could have a nice Santa rally followed by the January Effect……..  Guessing how high we go is not my game, but riding the wave until we get there, IS.

Do you play earnings?   

simple answer:NO

If you are an investor, you are not “playing” earnings, you are investing through them for many years.  If you are a trader(day or swing), YOU DON”T PLAY EARNINGS!!!!!!     If you are a gambler(cuz that is EXACTLY what it is) feel free to roll the dice.

The only success you will have “playing”/gambling on earnings, is when the BIG MONEY(institutional) is front running the action with options.   And YES, they do know something, most of the time.

What the heck is OPEX?

simple answer: http://en.wikipedia.org/wiki/Expiration_%28options%29

The 3rd Friday of every month options expire(obviously we  have weekly options too).  This action usually creates volatility, and often you will see a low print in the market  Thursday/Friday, the  week before expiration.

 

I still feel the financials($FAS, $C, $GS, $JPM, $BAC) will lead this market higher into Jan Opex.   Buy the dips and use stops.

 

Good Luck to all