new stock - PKTR

thought i'd mention a stock i bought yesterday that fits my methodology -
PKTR(low-medium risk trade)

1) over-sold about 2 weeks ago based on missed earnings based on my indicators.
2) good fundamentals based on my analysis
3) double dip (in stocks i've been tracking, they seem to get a nice strong rise after a dipping for a second time)
4) doji tuesday, with a confirmation of an uptrend yesterday.
5) stock strong at the end of yesterday
6) CEO reaffirms guidance for 4th quarter
7) avg volume 655K (i like stocks with good volume)

exit strategy - 10-20 percent (8.80-9.50) gain or goes below the 2 dips(7.40 to 7.50 range).

stocks

I have been negligent in keeping my blog up to date with my trades and thoughts. This is where I am today.

Current holdings
CAMP - feel great about this stock, continues to make 52 week highs
QLGC - oversold, repeatable pattern occurs - drops after earnings and then slowly climbs for about 20 days.
CMT - nice move, got in at the low and has been running since earnings
ENG - bought when it was oversold. nice earnings. still holding
STKL - great potential for this company. earnings were so-so to bad, but has held up well.


Potential holdings
SNCI - huge buy of 600,000+ shares drove the price up to 3.50 from 3.00on thursday. on wed annnounced new CEO and so, so earnings.
OSTE - dropped to 3.50, now coming back. what is interesting aboutthis stock is that it had a take over bid of 6.25. the deal didn't go through and the stock became over-sold. it seems to me that management will be under enormous pressure to get the stock to at least that level or sell the company. the stock is around 3.80 now. even if the stock moves to 4.08 that is a 10 percent gain.
for both these stocks downside seems limited.

couple more investing points

1) Maintaining your capital is very important. So what you hear bandied about is set your losses between 6 and 7 percent. As withany kind of advice you need to see how it fits into your tradingmethodolgy. What I found was that I just can't time getting into astock well enough to avoid 6 or 7 percent drop at some point. Whatwas happening was I was always selling at a loss. A stock under $10can easily move 6 or 7 percent in minutes. How many stocks have beenwritten about here that don't have 6 or 7 percent drops in minutes?So in my methodolgy I'm looking at a declining pattern over days,look at the candlesticks, volume and any events that would cause adrop. So for myself personally I have not set a hard 6 or 7 percentlimit. I found I was always losing money that way. I also am buyingstocks that are over-sold and looking for the botton. I may notalways gets the bottom, but based on looking at a lot of charts they bounce back quick (a recent example is CMT, you could of bought at 5on Fri, sold on Mon at 4.50 (10 percent loss) to see the stock todayat 5.50 and looking strong). Maintaining your capital is extremelyimportant, but when you decide to sell it should be in the context of your methdology (e.g timeframe, momentum trader, etc).

2) I personally found additional risk using EW. When I use technicalindicators I understand there meaning clearly. The risk usingtechnical indicators is that the stock doesn't follow them (that'swhy people use combinations of indicators and fundamentals). UsingEW I have the risk of not counting the waves correctly (assumingthere is an agreed upon correct count), plus the stock not followingthe count. So for me I have doubled my risk, I may have counted the waves incorrectly or the stock doesn't follow the wave pattern. Andfor me I will not which it is. Did I miscount or did the stockdecide to do it's own thing.

3) I personally think losing money from recommendations on this andother boards was the best thing for me. At the end of the day youneed to rely on yourself and have confidence in your trading ability. If you don't think you can then join a mutual fund orMartens fund. I highly recommend www.stockcharts.com for thetechnicals. I look at the filings for the fundamentals. Look atstocks you have done well with. Then look at the indicators, where were they, did they tell me anything, is there something common aboutmy winners. If you do find a pattern then you can scan for that tofind other stocks. It doesn't have to be complicated. Personally Ionly use 2 or 3 indicators that I find show a trend before the actual price movement. Most of the indicators are just derivations of eachother. (indicators are just one part of my methodolgy, the firstpart to identify a stock as potential investment)

4) The one thing that I think is missing when people recommend stocksis 'RISK ASSESMENT'. I now own several stocks and each of them have a different risk associated with them and I treat them accordingly.For example when IPII was recommended confidence was very high andrisk was low. A great pick. It's OK and expected to be wrong whenputting forth opinions on stocks, but it is helpful when putting forth an opinion on a stock what is your confidence level and thenwhat are you doing in your investing strategy based on yourconfidence level. It could be as simple as prefacing your commentswith high, medium or low risk trade. In summary not all trades are equal.

comments on trading

Let me add my two cents on trading as I have given it an enormousamount of thought and have made many, many mistakes.

1) First and foremost understand your psychological makeup. What Imean by that - what makes you comfortable in investing in a company.Some people use pure technicals, others use fundamentals. Some acombination of both. Some people like fast moving stocks, otherpeople pick conservative stocks. Some people short stocks othersdon't. Some people day trade others hold for years. There is noright or wrong, but you need to figure out what criteria you aregoing to buy a stock and sell a stock.
2) Investing is about being risk adverse. Everything you do is about minimizing your risk.
3) You need to come up with your own methodolgy of trading that youfeel comfortable with (its all about minimzing risk, this is notgambling). Classes, books and people give you information to armyourself with, but you need to synthesize it into a methodolgy thatyou believe in.
4) Following someone else blindly is a recipe for disaster.
5) Have supreme confidence in your own ability
6) Ignore all the cliche's. (don't buy a falling knife, diversify,buy at the top, etc). An investing methodolgy is not about cliches,it is about a set of rules you adhere to when buying and selling astock. (some could say my methodology is buying falling knives. lol)
7) When you buy a stock write the reasons why you are buying andfigure out your exit strategy before you buy it.

Some personal experiences -
1) Overall I have lost money following BT and Martens. It is notanything they have done, it is because I was investing blindly andwhen things went south I sold because I didn't have an understandingof there investing methodolgy. Emotionally I felt uncomfortable andtherefore made bad decisions.
2) I have taken BT class and did learn a lot, but I also have my ownbeliefs in investing. I took information BT gave me and used it inmy own methodolgy.
3) I personally have decided not to use EW in my methodolgy. If BTmakes a billion dollars with it I say more power to him. I know if Iuse it I will not be successful.
4) I recently created a methodolgy which I am following andtweaking. I have never been more successful in investing. I havebeen posting the companies and trades at the BT group. I haveinvested in companies like QLGC (recently bought), CAMP, STKL, CNQR(recently sold), ENG (just bought a couple days ago). I findcompanies that are oversold (based on technical indicators that icontinue to tweak) that have good fundamentals and have a goodstory. I then use candlesticks to try and pick the correct entrypoint. I use stockcharts scanning engine to find the companies andthen I review them.
5) I personally thought "Trading for a living" was a great book. Ialso like "The new market wizards: Conversation with America toptraders" This book showed that are many different strategies toinvesting.

I write becasue it helps clarify my thoughts and hopefully somepeople will benefit from it as well. Investing is an on goinglearning experience. Get your knowledge from where ever you can, but always test it against with what you feel comfortable with.And finally, no class or book will make you a successful trader. Itis information you need to UNDERSTAND how to leverage and APPLY inthe context of YOUR own personal trading methodolgy. (some people,no matter how smart they are, do not have the right personality to bea successful trader)