Egg 5 - ETPC Tool
But How many Shares did I or Should I buy?Now that you have some grasp of the stock market and candlesticks, a trading plan, charting program, and brokerage account, we will focus on addressing the questions of How many shares to buy? And, after you buy, How many shares to sell?
I use the E.T.P.C. tool to assist in answering these questions.
Many factors are used in determining how many shares to buy and at what price. You will have to make the final decisions, but what I hope to accomplish here is to help in keeping you focused on several areas of the decision making process.
Today is Monday, and we are ready for our first trade. "How much money to allocate for the stock trade? Buy 10,100, 1,000, or 10,000 shares of the same stock? Buy a $1 stock or a $50 stock?
The ETPC tool should help you sort out these questions and more! Study each chart carefully after you plug in the numbers. You may be surprised at the outcome of buying 100 shares, for example, at $2 per share. With a $10 fee to buy and $10 fee to sell, you would be at a 10% loss before the stock price moved one penny!
Also, consider the timeframe. Do you want to wait 2-3 years for the stock to move 50 cents? Or, does it sound better to buy more shares, allocating more money to make a 3-5% Profit in a few days, or a few weeks? Occasionally, in a few Minutes ! Some chickenfeed for thought.
I use a completely different thought process than you might and view trading from a different perspective others may have. My first thoughts when trading are, "What is my weekly goal?" and "What is my Monthly Goal?"
My Weekly goal is to have a Monthly profit of $1,000 + to supplement my retirement years. Goals must be reachable! It would not be smart to have $100 in cash and expect to make $1,000,000 per week...It just won't happen!
Next question, "Have I already accomplished reaching either Goal?" If the answer is No, then I focus on the immediate goal which is the Weekly or goal of $250+. Still, every week is different just as the market goes up and down so adjustments in thinking and goals are an on-going process.
Some trading weeks are better than others, and these will be different for each trader. You will have to find what fits Your Style and Trading Plan! For me $1,000 is reachable, but $500 is also reachable, even $50 or $100. 10 trades with $100 profit each has the same result as 1 trade of $1000! (hint)
After viewing stock picks I have chosen the previous evening from my charting program scans, let's pretend there are two promising stocks and three potential stock I picked for a total of Five to be watched like a Hawk the next trading day.
Preferred attention will be given to the two most promising stocks chosen. These will be at the top of my watch list as the Candles wouldn't lie to me, Right!
In one or two trading days, I will most likely Buy either one or both stocks. At other times, neither stock will do as expected. If I am able to watch live trading, I may only buy one of the potential three, or perhaps none at all as Not Trading and holding my cash is also an option. The other three stocks I will also watch closely as the top two do not always pan out.
Below, is a good chart illustrating the Candlestick Pattern I use the most, the J-hook.
MNKD illustrates the J-hook very well in the below chart- July 2. 2013
I bought MNKD at $6.85.
Chart courtesy of Stockcharts.com
For more recent examples checkout the Hawk's Blog where EVERY TRADE IS POSTED
It's the same J-hook I use every trading day !
Now some Hawkers may say, "Divide your portfolio into 10 equal stocks. and allocate 10% for each!" However, my research shows that all stocks do not trade equally! I would not expect the Newest Super-charged Racecar to trade like a covered wagon!
Also, the Candlestick patterns do work, and I trust them above all. Of course not all trades are positive as everyone would be doing the same as I do. My point is, with Candlesticks, I have faith in the Candlesticks, so why not Trust them if the previous years have proven to me that they work?
My goal is not to divide the total money available to invest into 5 or 10 stocks. MY GOAL IS TO MAKE MONEY !
To the question of, " How many shares to sell?" I have tossed and turned on.
For the majority of SELLS, I usually Sell ALL Shares in One transaction. This allows me to take the maximum profit (at that instant of time) and move on to find another stock to buy. Why?
There are several reasons for this:
Fewer stocks to manage at any time.
Mistakes may be made if holding a stock (losing track, forgetting about it) - resulting in a lower Total Profit
Save $ on Transaction Costs (more pocket money for me)
Keep Practicing, and when you get tired just practice some more.
Good Luck in Your Trading!