How to play an overheated market correction

Discussion in 'Stock Market' started by HaShev, Feb 6, 2018.

  1. HaShev
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    HaShev Gold Member

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    I'm extremely good at picking the bottom of corrections and crashes, this one is a typical correction as expected.
    There is usually a double dip to the bottom (this was about 12% off the highs)
    and when it holds the correction territory of 10% after the double dip to feel the bottom without falling below that bottom, then it's usually time to start buying again.
    To protect your portfolio and benefit from extreme volatility, forced selling, and lacking liquidity, just place 20-40% low ball bids on funds that every couple years show those anomalies in the low range that I call accidental wipe out of stop losses or you call flash crashes.
    After watching these stock traded funds ranges each year you will notice patterns and learn to read the potential repeat lows hit during these moments of volatiity and sharp sell offs, which you prepare for when the vix creeps up off long low ranges.
    Sometimes the market makers give the low target away with it's low ball bids sitting before open. Sometimes the clue sits in options trading data target price overcrowding.
    Most people seeing a healthy $8-10. stock fund would never suspect they can crash
    down to $5. accidentally.
    Example; the worst trading day in a while was yesterday, yet without shorting my portfolio made money. How? By such protection from volatility that accidentally hit such low bid (known from past experiences) and by days end that stock was up 20% for my hitting the low, countering any losses and adding enough to make gains for the day.

    One time my low ball grains futures hit accidentally and it was bought back up to give a
    8 or 9% gain in the same day of the lows I grabed, so I sold it as a day trade. Grain futures rarely move but .35 %
    a day, so 10% moves are accidental timed moments that require tying up $ into bids to catch them when they occur.

    Todays open was the perfect time to get back and start new positions below the correction territory. ....but the volume killed the broker web sites I'm sure, and chasing ask prices probably made timing difficult. This is why you have to Buy for the researched target price, because that rubberband can snap back just as easy as those flash lows take everyone by surprise.
    (You could be at work, out shopping, out eating, and miss your best opp.)
    In feeling out the bottom you sometimes take short term losses, but the turn around usually makes it impossible to play games in bargain hunting.
    I've been known to guess stock lows and miss by pennies, usually sitting 1 cent below or the worst feeling is to get the exact low, but the bid
    does not get filled.
    Being cute with your bid pricing and timing can make you miss your purchase, because the market maker can be spiteful or at least it seems that way when it happens too often.
    Signed- nickname "Missed by a Penny"
     
    • Winner Winner x 1
    Last edited: Feb 6, 2018
  2. HaShev
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    HaShev Gold Member

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    Correction:
    It was an 11.4% gain on grain futures not 8-9%
    I believe the temp liquidity issues or market maker resolve caused a temp 10% plunge hitting my bid, then by days end closing up over 1%.
    Of course because it was such a boring stock as grain prices, I took the quick day trade profit and never looked back.
    Nope, not gonna make any jokes on making
    lots of dough on wheat futures.
     

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