Saturday, December 7, 2013

Day Trading Rules and Methods

Day Trading Rules and Methods

Here are Trading Rules in order of Importance.

#1.Be in All Cash. Almost always be in all cash, particularly when away from trading and overnight.

#2. Be Ready to Close all positions. Set up each to close with 1 button to push, using your Manual Stops.

Stop out on new recent lows of 1/2% of more on the stock and back in on new recent highs or bottom fish.
Trade with the market Direction if DJIA more than 0.3% move, else be in cash.

Add to the Trade, IF: When a Stock is in a consistent up-trend, Buy More Stock Options if at New Recent Highs of more than 1/% up from recent lows, recent lows above your purchase price we call a "consistent uptrend."

Widen your Stop price if Stock up over 1.5%. then use ½ or 1/3 of the Move. With Tesla up from 98.25 to $104, use $101 or 102. Once 1 hour has passed with no New Low, then New Recent Lows become your Stop, like TSLA at $102.5 might be.

Use the price of the Stock, not the Option to make decisions.


Trading: What stocks, option exercise and amounts to buy?

To Choose Stocks for day-trading of it's Options use both:

Your Own List and New 52 Week Highs:

At I use new 52 week highs sorted by today's stock price change for

Option Exercise: Choose the price below the current price and the next 1 above if trade continues, Adding On. Example: TSLA price 98.25 use the $95 next the $100. Start with a small account using the higher exercise price first.

You have No Stops in market normally. Why? Because they get triggered by mistake unless liquid like AAPL or QQQ.

Rule #2 says be ready to close the positions by hand and Move your stop normally to a1/2% down move on Stock price, like $0.50 with Tesla at $98.25 and $2.20 with AAPL at $440.

Yes, Stops, If: If you have more than 4 active open positions like 3 of 1 stock and 1 of another then do consider using Stops, if Trade is strong.

"Your List" of stocks and ETFs to consider trading should include all the highly liquid companies and ETFs like FAS an TNA which are Ideal for Day Trading. Some of my favorites are Apple, LinkedIn, Tesla, First Solar, Goldman Sachs and Google.

Summary: Be ready to close all positions immediately to be in All Cash.

Friday, January 4, 2013

Designated Driver company is possible

Designated driver is a business concept that could be implemented with dispatchers and drivers in every city.

It could be done very efficiently by allowing drivers to receive some substantial percentage of the margin after paying the drivers fuel etc. and for dispatch and related internal costs.

The First Version could be shared in an auction market or in a fixed price market on a regular basis every night.

Initially designated could use all independent drivers. Later the company could form a division to have its own drivers, perhaps.

The company could provide insurance for drivers and background checks for the insurance companies and do other details to make the process safer and easier for drivers customers and the company

Startup costs could be about $100,000 to proof of market and pricing starting in a city the size of Springfield or Worcester Massachusetts Providence or Orlando Florida.

Saturday, November 5, 2011

Early Stage Valuation Pricing and Forecasting

How much do I get for $50,000 investment?

At Pre-Startup time the valuation for a directly experienced CEO and a thorough Business Plan is often set at $500,000; so, raising $50,000 then would sell 10%. If the Team is Complete then the Valuation is often $1 million.  Is a strong proprietary service or product is credible then Valuation tends to move to:

  • a discount on Valuation in Year 3 or Year 5.
The Valuation to Revenue Ratio is often the Key. Here is how you generate a Credible Forecast.

A credible Forecast and a Valuation Rationale should be presented and updated in reports to Investors.

Your Forecasts hang on 2 big issues: A Revenue Formula and Sales & Marketing Costs.  Forecast Monthly and update the Forecast at mid-month.

Examples for Revenue Formula and Cost: 
  • You expect the average sales person to generate $0.5 million initially growing over a 2 year period to $1.0 million each.
  • 45% to 55%, even 70% very early, as the Cost of Marketing for Advertising and Social Media Marketing is often appropriate for a high margin business.
Valuation, in early stage companies, uses the Valuation to Revenue Ratio. Identify Valuation to Revenue for publically traded comparable companies, like 4 times annual revenue. 

As a private company, use 50% of the Valuation to Revenue Ratio as a rough guide. A Rationale you might add is that your growth rate for the 1st 5 years is way above growth at Comparables.

A Valuation Example: In our 36th month, revenue for the month at $600,000 is a Run Rate of $7.2 million annually. Using 2 times revenue, that puts our valuation at $14.2 million. 

Rapid growth can be forecast well and controlled if you re-visit the forecast 2 times per month and if you insist on Measurement and Repeatability.

For more about a measurable and repeatable Revenue Generation Formula, please see my:

Early Financing: Angels and VCs the Fit

At #quora a Question asks if Early Stage Companies should choose Angels or VCs.

1. I prefer Angels for very early stages. They can bring local contacts as Employees or Customers and they do not interfere is strategy or in management. So, I choose Angels Until ...

2. VCs, Venture Capital is preferred when you want to raise $2 million+ and when you want Coaching and non-local Contacts.

Sunday, March 27, 2011

Story Stocks: Alternative Energy, Drillers, Miners

Hello. Do you trade Stocks? 

I do, a little. Most of my stock market time is day trading of stock options. Please see the Option Results posted 27 March 2011. From about $520k to about $1.4 million is the recent increase.

About Stocks. I trade those that are high volume and making New Highs including $AAPL, $NFLX, $GMCR, $NVDA, $ERX, $UCCO etc. I also Research Story Stocks, and trade them some times.

#Green companies, particularly in Alternative Energy is one focus.

A summary for each company is in a Row of the main table below.

Clean Energy Fuels $130 million in 2009. CLNE provides Natural Gas Fleet vehicle support, including an option for bio-methane.
from constructing, equipping and maintaining fueling stations to converting vehicles to securing the financing. 

Clean Energy, in 2009, opened the world’s largest public LNG truck fueling station to serve the Ports of Los Angeles and Long Beach and to act as one of the hubs of the new Southwest LNG Trucking Corridor for regional trucking.
GasFrac Energy of Canada TSE:GFS $97 mil in 2010 uses and licenses technology for Tar Sands to be handled cleanly using petroleum to force rather than water.

New Energy Tech NENED has late prototypes for Solar Windows. Spray it on and an existing window gens solar energy over 200% more efficiently than competing technologies.

SmartHeat is in China reducing Coal CO2 emissions.

As the developer of 6 key patents across our product lines, SmartHeat's plate heat exchanger (PHE) technology and products help reduce fossil fuel related costs and pollution by capturing and recycling waste heat thereby producing less CO2 emissions. More efficient energy use also leads to significant savings for end users as shown in the following illustration:

Heating Method
Coal Consumption(metricons)
Heat Produced(Kcal, million)
CO2 Emitted(tons)
Costs in Coal, USD
(excluding water and other costs)
District heating system connected to a co-generation power plant
1,680-1,870 KCal
Small Boiler with traditional shell-and-tube
heat exchanger

 Story Stocks
What follows is extracted from a portfolio.

Agenus IncAGEN0.910102.53M258,610.001.720.7(0.24)1.69
Albany International...AIN24.62768.14M145,246.0026.09151.2020.441.79
Approach Resources Inc.AREX31.73902.22M249,615.0034.726.120.3590.801.04
Atwood Oceanics, Inc.ATW45.492.94B841,482.0046.5423.713.7312.201.38
Bellatrix Exploration...BXE5.43*529.14M707,688.006.192.53(CA$0.29)1.56
Brigham Exploration...BEXP35.284.13B2.58M37.113.450.3892.242.91
China Agritech Inc.CAGC6.88142.87M599,508.0028.386.690.2132.561.79
China Shen Zhou Mining...SHZ4.36*134.34M2.79M10.840.60.2219.402.55
Clean Energy Fuels Corp.CLNE14.05987.06M1.44M23.711.75(0.11)1.98
Cleveland BioLabs, Inc.CBLI7.32213.18M222,415.009.62.8(0.99)1.61
Coffee Holding Co., Inc.JVA5.6531.02M33,488.008.143.670.5210.852.34
Cree, Inc.CREE44.854.91B3.62M83.3842.761.8823.840.89
Dolby Laboratories, Inc.DLB48.105.39B1.04M70.1446.82.6218.360.88
F5 Networks, Inc.FFIV95.677.73B4.78M145.7660.52.1943.771.25
Gabriel Resources Ltd.GBU7.27*2.53B624,$0.07)0.54
GASFRAC Energy Services...GFS12.43*757.72M548,654.0014.620.1CA$0.11115.36
Gastar Exploration Ltd...GST4.66*299.07M397,184.005.772.85(0.25)1.33
General Moly, Inc.GMO5.26*386.66M821,574.007.252.85(0.22)2.90
Green Tech. Solutions...GTSO2.75*367,785.00113,850.004000.2(1.57)-3.34
GREENLAND MINERALSGDLNF1.06*300.67M394,868.001.440.185
Hong Kong Highpower...HPJ3.3745.77M71,442.006.56992.810.388.82
Huntsman CorporationHUN17.754.22B3.14M19.18.17(0.07)2.08
Itron, Inc.ITRI53.022.15B693,467.0081.9550.762.5620.721.46
K-V Pharmaceutical...KV.A8.97536.50M3.21M13.550.605(5.49)3.01
Metabolix, Inc.MBLX9.58257.79M207,917.0018.4397.77(1.45)1.66
Midway Energy Ltd.MEL4.79*329.06M425,285.005.322.81(CA$0.06)1.97
Minefinders Corp. Ltd...MFN12.75*1.02B605,999.0013.098.24(0.17)0.98
Netflix, Inc.NFLX230.0112.17B5.94M247.5573.342.9677.620.48
New Energy Tech., Inc.NENED2.55*52.53M115,723.009.871.275(0.08)2.40
NVE CorporationNVEC56.02267.00M45,387.0063.49382.7320.501.02
QC Holdings, Inc.QCCO4.2773.22M16,105.005.583.380.785.440.34
Quality Systems, Inc.QSII81.992.38B186,857.008352.91.9342.460.90
Rare Element Resources...REE12.37*558.19M3.40M17.922.79(0.06)
Silvercorp Metals Inc...SVM14.072.46B2.67M15.355.860.3935.63
SINA Corporation (USA)SINA103.526.31B2.68M104.4432(0.39)1.34
SmartHeat IncHEAT3.43132.23M273,376.0012.693.350.685.047.13
Sodastream Intl. Ltd.SODA42.01772.31M431,599.0046.8823.150.9842.85
Synalloy CorporationSYNL12.7580.19M10,827.0015.57.90.6419.921.66
TransGlobe Energy Corp...TGA13.891.01B621,613.0020.265.330.5525.251.00
Western Wind Energy...WND1.46*76.80M142,518.001.731(CA$0.08)1.24

-- from Bruce W. Lynch
Boston area Technology Entrepreneur --  Comments about Stocks, Start-ups, the Economy, and Green issues.