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Author of a small unique book: ''The small stock trader''. Zen/psychology, indie stock trading, girlfriend, tennis/cycle/swim, travel/poker/pool/cigar/wine...
My blog:
The small stock trader
My book:
The small stock trader
  • Catalysts That Trigger Stock Price Changes

    Below is just a little information from my small unique book "The small stock trader":

    It is generally believed that about 50 percent of stock price movements are influenced by the market sentiment, about 25 percent by the industry, and only about 25 percent is the result of company-specific news (this percentage is higher with small caps). I am not sure about the exact percentages, but it is definitely true that non-company-specific news has a much more significant impact on stock prices than companyspecific news. One could argue that since about 75 percent of the stock price movement is the result of non-company-specific news, it would be wiser just to focus on the non-company-specific news and ignore the company-specific news. However, it is this company-specific news that you can somehow try to forecast. There may be over 100 different and unpredictable non-companyspecific catalysts that affect stock prices. So, you should focus your research on company-specific news and just scan macro news, especially if you are focusing on a few small caps. Some of the most frequent catalysts that may affect the stock prices of your focus stock are:

    · Market sentiment (GDP, inflation, monetary policy, fiscal policy, government regulations, unemployment, consumption, trade balance, other financial and commodity markets, political and international affairs, nuclear and climate change challenges, military wars, currency wars, cyber wars, natural disasters, conflicts in the Middle East, Asia, globalization issues, etc.)

    · Industry

    · Corporate results

    · Profit/loss taking

    · Institutional buying/selling

    · Analyst ratings

    · Dividends

    · Insider trading

    · Share buybacks

    · Promotion

    · Shareholder activism

    · New management, products, orders, or shareholders

    · Reorganizations

    · Right issues

    · Stock splits

    · Inclusion in an index

    · Calendar effects

    I hope the above little information from my small unique book was a little helpful!

    Mika (author of "The small stock trader")

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Sep 15 7:47 AM | Link | Comment!
  • Short (Stocks) Selling Tips

    Below is just a little information on short selling from my small unique book "The small stock trader":

    Short selling is an advanced stock trading tool with unique risks and rewards. It is primarily a short-term trading strategy of a technical nature, mostly done by small stock traders, market makers, and hedge funds. Most small stock traders mainly use short selling as a short-term speculation tool when they feel the stock price is a bit overvalued. Most long-term short positions are taken by fundamental-oriented long/short equity hedge funds that have identified some major weaknesses in the company. There a few things you should consider before shorting stocks:

    · First of all, you want to short stocks when the market sentiment is negative (in the bull market most stocks go up, and in the bear market most stocks go down);

    · You should also look for changes, besides an expected profit taking, that may trigger a stock price decline, such as massive insider selling, a lower-than-expected earnings report, profit warning,a dividend cut, etc.

    · Beware of short squeezes and takeover bids (small caps are more vurnerable);

    · Check the short interest (ratio) and its trend;

    · Be quick (stock prices decline several times faster than they rise);

    · Cut the losses short and don't average down your losing short positions to avoid being caught up in a cross fire of a Volkswagen short-squuezelike scenario;

    · For longer tern short positions, one of the best candidates to short are the former leaders, big winners, close to the top of the bull market, as these same winners of the last bull market usually fall the hardest in the next bear market. Early-cyclical stocks are also good candidates to short in the beginning of bull/bear markets.

    Despite all the mystique and blame surrounding short selling, especially during bear markets, I personally think regular short selling, not naked short selling, has a more positive impact on the stock market, as:

    · Short selling leads to better price discovery;

    · Short selling increases liquidity, which in turn narrows the bid/ask spreads;

    · Short selling may also serve as a hedging tool or a pairs trading tool;

    · Short selling provides profit opportunities in bear markets;

    · Short sellers are a counterforce against upside-biased insiders, stock analysts, investment bankers, stockbrokers, stock investors, and creditors.

    Lastly, small stock traders should not expect to make significant profits by short selling, as even most of the great stock traders (Jesse Livermore, Bernard Baruch, Gerald Loeb, Nicolas Darvas, William O'Neil, and Steven Cohen,) have hardly made significant money from their shorts. it is safe to say that odds are stacked against short sellers. Over the last century or so, Western large caps have returned an annual average of between 8 and 10 percent while the returns of small caps have been slightly higher.

    I hope the above little information from my small unique book was a little helpful!

    Mika (author of "The small stock trader")

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Sep 10 5:51 AM | Link | Comment!
  • Best Stock Trading Books

    I have read around 100 stock market books, almost all the most recommended ones, and the best ones among them were:

    · The small stock trader by Mika

    · "Lessons from the greatest stock traders of all time" and "How legendary traders made millions" both by John Boik

    · "Reminiscences of a stock operator" and "How to trade in stocks" both by Jesse Livermore

    · How I made $2,000,000 in the stock market by Nicolas Darvas

    · How to make money in stocks by Willien O'Neil

    I would also recommend that you study all the available materials (interviews, letters, etc.) about Steven Cohen and Edward Lampert.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Sep 02 1:04 PM | Link | Comment!
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