What is an 'Open Trade' ?

frothy-coffee_2

Hi,
In a book on share trading I'm reading, the authors suggests that you shouldn't have more than say, about half a dozen 'open trades' going at any one time. So you can keep on top of them all.

What does mean?

datostar

Probably refers to derivatives type trading, e.g. CFDs, futures, options etc. where you have placed a 'bet' on prices movingup or down. Possibilities of large gains (and losses!) so you need to keep a close eye on developments.

Loughton_Monkey

An 'open trade' is one still open!

Most 'day traders' seek to close all their trades at the end of a day. But earlier in that day, you could have gone long on GBP v USD. You might have shorted silver. You might have bought some Brent Crude, and have a long position on FTSE100 .....

It is suggesting that it's rather difficult to sit and look at much more than 6 graphs at any one time.

geoffgeofftygeoff

It's within the 7 plus or minus 2 described in research by Miller, 1956:

http://en.wikipedia.org/wiki/The_Magical_Number_Seven,_Plus_or_Minus_Two

It talks about 'working memory capacity' and is quite interesting IMO. No idea if that's where your author was coming from though.

frothy-coffee_2

Loughton_Monkey wrote: »

An 'open trade' is one still open!

Most 'day traders' seek to close all their trades at the end of a day. But earlier in that day, you could have gone long on GBP v USD. You might have shorted silver. You might have bought some Brent Crude, and have a long position on FTSE100 .....

It is suggesting that it's rather difficult to sit and look at much more than 6 graphs at any one time.

Thankyou,
I sort of understand what you mean. The author can't be referring to an open position on run-of the-mill-shares because anyone who owns shares is technical open on them? I suppose with volatile shares the price can more fast so if you were a day trader you would want to keep an eye on them.

With regards to day traders. Do they mainly do spread betting, CFD's, things like that. Day traders surely wouldn't trade FTSE 100 stocks because the price doesn't move that fast (unforseen events aside)and the costs would outweigh the profits. Unless you were trading large quantities?

frothy-coffee_2

geoffgeofftygeoff wrote: »

It's within the 7 plus or minus 2 described in research by Miller, 1956:

http://en.wikipedia.org/wiki/The_Magical_Number_Seven,_Plus_or_Minus_Two

It talks about 'working memory capacity' and is quite interesting IMO. No idea if that's where your author was coming from though.

Thanks, I'll read that later, it looks intersting. I like psychology

Cleaver

frothy-coffee wrote: »

Thankyou,
I sort of understand what you mean. The author can't be referring to an open position on run-of the-mill-shares because anyone who owns shares is technical open on them?

I think they are. I think of an 'open trade' as any share I own. Some of these open trades may only be open for a few days, others for a few years.

I generally don't own any more than a dozen shares at any one time.

frothy-coffee_2

Cleaver wrote: »

Some of these open trades may only be open for a few days, others for a few years.

Do you have some steady 'bankers' (good dividends) and some more risky (small cap) stocks? Does the volatility determine how long you hold it. Or is it when you think there's not much more value left in it or it may go south? Can you get enough diversity with a dozen stocks, or soes that not matter if you're confident in the ones you own?

I'm just trying to learn

Cleaver

frothy-coffee wrote: »

Do you have some steady 'bankers' (good dividends) and some more risky (small cap) stocks? Does the volatility determine how long you hold it. Or is it when you think there's not much more value left in it or it may go south? Can you get enough diversity with a dozen stocks, or soes that not matter if you're confident in the ones you own?

I tend to have most of my serious money in a cash and then a mixture of funds - trackers, managed, bonds, gilts etc. So a lot of the more 'boring' shares will be held within these and I tend not to ever buy FTSE 100 or 250 shares individually.

The money I set aside for investing in shares mainly goes on quite risky AIM shares. My attitude with this money is that I could lose the majority of it, so on that basis it's a risky hobby. Although I do a lot of research and do take it seriously, so my objective is to make money.

I don't tend to own any more than a dozen shares at any one time, and it tends to be closer to five or six as a norm. Sometimes it's zero. My timeframe depends on the share. I'm holding XEL at the moment and I don't trade it and don't really look at the share price that often as I believe in the long term fundamentals of the company and plan to hold for the long term (ten years plus) if the company carries on as planned. Other shares I might only hold for a week or two if they've had a sudden upward movement and I just fancy taking profit. It all depends.

frothy-coffee wrote: »

I'm just trying to learn

It's good fun, but if you're going outside of the FTSE 100 please don't invest money that you can't afford to lose. The smaller companies on the FTSE and pretty much all the companies on AIM can move sharply up and down for little or no reason. It's infuriating yet exciting.

My tips would be:

• You exit strategy for a share is an important as your entrance strategy. Think about when you'll get out of the stock, both upwards and downwards.
• Research anything you own from top to bottom before investing.
• I liked the Naked Trader's book. It's a simple intro. You'll find it on Amazon.
• By all means read share bullein boards, but you have to be so careful. When you read positive tips on shares, remember that any old idiot could be just making up what they say.

Lastly, I'd suggest you invest in XEL. In all my years of investing, it's the best prospect I've ever seen. I never invest more than 10% of my money in one share, but I've invested 50% of my money in it as I see it trebling in three years. You don't want to miss out on this one.

(p.s. that last paragraph was a test based on bullet point 4).

frothy-coffee_2

Cleaver wrote: »

It's good fun, but if you're going outside of the FTSE 100 please don't invest money that you can't afford to lose. The smaller companies on the FTSE and pretty much all the companies on AIM can move sharply up and down for little or no reason. It's infuriating yet exciting.

My tips would be:

• You exit strategy for a share is an important as your entrance strategy. Think about when you'll get out of the stock, both upwards and downwards.
• Research anything you own from top to bottom before investing.
• I liked the Naked Trader's book. It's a simple intro. You'll find it on Amazon.
• By all means read share bullein boards, but you have to be so careful. When you read positive tips on shares, remember that any old idiot could be just making up what they say.

Lastly, I'd suggest you invest in XEL. In all my years of investing, it's the best prospect I've ever seen. I never invest more than 10% of my money in one share, but I've invested 50% of my money in it as I see it trebling in three years. You don't want to miss out on this one.

(p.s. that last paragraph was a test based on bullet point 4).

I've read the NT book and think it's excellent. I've also read one by Rodney Hobson which a very good introduction the market. I've still got a lot to learn and will try 'paper trading' first as NT recomends. Share trading may not be for me. And I may stick to cash and funds.

Your last paragraph made me larf and I thank you for posting it. I felt a surge of 'This guy knows more than me and I don't want miss out. Better get in quick'

I will remember that as a lesson learned. Thankyou.

sabretoothtigger

XEL is so good because its in Kazakhstan ? Size of europe, population of london. I figure it could be under developed
I shall have to read on it I guess, I have not got round to it.
Dont they have large amounts of debt or something



6 open trades might be good advice. I have like 50 open but only really a few are large amounts and some are open but entirely made up of previous profits.
I try to have more open when everything is dire then hopefully trim it all back when we have a miracle run up afterwards