quadcam

MM, thanks for the advice, I totally understand the risk and volatility of low priced stocks and I do as much TA and research on them as I can before I commit to purchase. I'm not expecting any of them to hit $20 or even $10 for that matter, mainly I'm just looking to double my investment. some of them are as you said, long term downtrends and sometimes I screen for just that, beaten down companies who may have some new product with potential. most, if not all of these are short term holds not long term investments as KO, IBM or one of the big blues that pay out dividends would be. some of my recent purchases are doing well tech companies with record earnings, restaurants making a big turnaround, biotechs with recent fda approvals. but due to the volatility I'm just not sure if it's better to take profits during a run up or set a target of 2x-3x the original price and put a trailing stop on them just below support. thanks

Hey all, I'm new to the forums and recently started swing trading the stock market. A little before my question, I've been messing with investing on and off for a few years. I started out with a very low funded buy and hold account with no real clue as to what I was doing. Up to that point the only thing I had done was read the motley fool investing workbook. So I bought a few low priced stocks made a few bucks profit on some but mostly lost more than I made. fast forward a few years and finally decided to take advantage of the 401k from my employer, picked a few risky funds and had a decent return. One day my employer offers a new option "self directed brokerage account" I'm all over that. so i dump my mutual funds and lose $1300 right off the bat, then I start buying stocks....again no clue about money management or really how to pick a stock. "hey i have $5000 so i'll just buy 3500 worth of this one and 1500 of that" :crap: ignorance is bliss i guess I also had no clue as the the difference between investing and trading, AFAIK but a stock hold till the price eventually goes up and sell. So one day I'm reading a tech blog and see a blurb about a small tech company who developed a new, never before seen memory module. I find the stock and purchase a few shares, the next day the share price triples and I sell for a nice little profit. Wow what a good feeling, so I wait a day for the price to settle and I sink about 50% of my total account equity into buying more shares. I keep accumulating as the price keeps going lower and lower :doh: 6 months later i have about 1500 shares and "it's going to pop any day now....any day" as i watch the price drag down day after day but keep telling myself "any day now, any day" meanwhile i start actually trying to learn where i'm going wrong and paying attention to an investor with a video blog who has been there done that and learned the hard way. I learned a lot about cutting losses, the 2% rule, risk/reward, reading charts etc. I finally bit the bullet and dumped that tech stock for a $2000 (50% of my total account balance) loss. fast forward to today and I have a much better understanding of the markets but i'm still struggling as to where to set my price target and take profits. I deal mostly with penny stocks (under $5/share) and most of those are in either the tech or biotech sectors which are both pretty volatile and can run up or take a nosedive simply based on someones blog entry. I shoot for a 1:2 risk/reward ratio but that can be really difficult with these stocks. I'll give you an example purchased 150 shares of MCZ for $1.15 share, the other day they release record earnings and shares jump to a high of $1.53 before closing at $1.45 now assuming i had seen the reverse coming and put in a sell order for $1.50 that would have netted me a whopping $35 after commissions. However in this case I decided not to sell, they announced 98% growth and record profit and have a recent deal with microsoft and based on potential I added another 150 shares at the close for a total of 300 for an average price of $1.31. I really don't know if i should have just sold at the top and took a small profit or hold out for my 1:2 target of 2.30 and if it hits the target price either sell of place a stop in the case it keeps running. so am i setting my target correctly? if i pay $1.15 share i should be setting a target of $2.30 or better and in that case where would you place the stop loss. i've been doing a stop of 20% below my share price so in this case my stop loss would be $0.92