Generally, the price of a stock is formed from the effects of any development
in the products and services of the company and its competition. Any change
in the national and state economy in which the company operates does affect
the stock price of the company. Any cyclical change as well as the scientific
conditions to which the company belongs, may impact the intraday price
of the stock.
To get familiar with the factors affecting the stock price of a company, reading
Wall Street Journal, CNBC and Bloomberg at three time intervals seems warranted: before 9:30AM at around 12PM at around 2:30 to 3:PM.
Stock price is always fluid!
Loss Contingency Sale (LCS) is the relible protection from the volatility of the market!
Stock TDOC; date 5/10/21; I minute chart; time is 10:50 to 11:30.
At 11:16 green candles began to appear at $141.60 at bottom.
At 11:20 the top of the last green candle was near &143.40.
So, price rose $1.80. If you had 800 shares($120,000/$142=845 shares), 800 shares x $1.80 = $1,440. If you rode the rise, you earned $1,440. Here I could short the stock at 11:15 and I did not put LCS, I could have lost lots of money. Because the stock turned around, and began to rise and continued to rise till 11:20AM. See the importance of LCS?!
Risk of stock price volatilty? In this chart, during 40 minutes, decent size--up down and up down --> twice. How risky it is without LCS? Often, stock price moves up & down almost every minute! Impossible to trade!
Chart description and price move characteristic
60 seconds as the window to show how the stock is moving in dollars or cents or both
At left chart, top section has red or green candles, and one candle represent one minute and red candle means price fell and green price rose. Once price change the direction, it may continue to the same direction for several minutes.
Price move is sudden.
Sometimes, stock price follows the index of Dow Jones
Many famous tech firms' stock price follows the index of
NDXT, Nasdaq Index. Meta, LRCX, TSLA and AMAT.
These indexes lead other stock prices most of the time.
So, when trading, you examine these indexes first and try
to get some clue about where the market is heading!
CBO Trading has elements of AI in the charts of these indexes
and critical informative signals and indicators advise traders
on the market direction.
So, the question is "How to protect from the volatility of a stock price?"
Or how to dodge the huge loss from surprise market price change due to
sudden political(including international), health(such as virus), economic and market turmoil?
Better yet, "How to take advantage of the unexpected rise or fall in the stock price?"
At least, how to avoid loss resulting from the price plunge when you have bought
a position in a stock or from price surge when you have shorted a position in
a stock?
Moreover, how do you dodge the open ended loss? That is the critical question!
The Answer is the use of so-called Loss Contingency Sale!
Every time you buy or short, it is done with LCS without exception!
Drive? Seat Belt on, Likewise, Trade? set up LCS!
Can you imagine 'driving without seat belt on'?
Never! Right?
When price moves against the position, it is crucial to take down risk.
How? Set up LCS before or right after entering "buy" or "short" trade. All the time!
LCS is where risk meets opportunity
Catch the wave of profit opportunity by dint of LCS!
Have you heard 'loss profit' or 'gain profit'?
When LCS fires, you lose a certain amount of money.
But it gives you the opportunity to make decent profit by
reversing the trade or reentering at a better condition. This profit arises from loss. So, loss profit.
And LCS is the essential tool!.
Now that the importance of LCS is realized, how much to assign to the amount of LCS?
Let us consider what affects the minute by minute direction of a stock price? The software of the stock market maker Some market maker uses the software unfit to the traders. the earnings report or new product or service report The market momentum to the stock The selling pressure or the buying pressure The price level of the stock(the pricier, the more volatile)
The factors mentioned above generate the change in stock price in size and duration
It is almost impossible for a trader to calculate the best LCS at the face of
fast moving market! What to do here?
Please see the charts shown below. One for the case of buy and the other for shorting.
An example. Trader A puts level 1 LCS, when buying(red chart) or when shorting(green chart).
His loss is limited to $500. But trader B puts level 3 LCS, when buying(red chart) or
when shorting(green chart). His loss amounts to costly $1,500.
See how important it is to decide the proper level of LCS to reduce any loss!
Imagine that several costly LCSs result in big loss pileup for the day
without any possibility to recover the big losses!
If the trader trades high priced and momentum stock, and if he were trader B, the loss could
be tantalizing. Of course, here again, he lucked out at least by avoiding open end loss
Here, red color chart is for "Buy" and green color chart for "Short".
AI is the unquestionable answer!
AI trading software takes into account all the relevant factors and computes proper LCS
amount instantly for either buy or short for the traders to pick and use.
What should be emphasized, the proper amount of LCS leads to the possibility of making
big profit amount! Looking at buying chart, trader A selects level 1 LCS for the price drop,
and if this first LCS is fired, he can buy the same stock again with Level 1 LCS.
Suppose the price of the selected stock falls for the second time.
Then, if he changes his trade from buy to short after the second LCS fire, he would make big
profit in addition to recovering the loss. Because the price could keep falling as the red arrow shows.
There are two types of LCS use. .
Type 1 -- as you have read so far. use the loss tolerance amount as AI software suggests. Manually enters this LCS separate from the trading order entry. Characteristic: slow and big LCS amount.
Type 2 -- express LCS, which is described in a separate web page called 'About Express LCS'. Please click on it. if you have time to read it.About Express LCS This LCS entered concurrently via trading software, right after the entry of the trading order. Characteristic: fast and small LCS amount occasionally benefiting from large jump or fall given the AI price direction is going to work.
If you would like to see the comparison of these LCS types in actual trading
results in terms of loss tolerance and profit opportunity, please click on
Comparison Analysis on LCS types in the results of actual trading
One often learn an essential lesson from the past legend in the same professional field.
Mr. Charles Munger who passed away last November, 2023 at the age of 99 and
who was the vice chairman of Berkshire Hathaway, left the world his investment philosophy,
"Keep cash and when a rare investment opportunity, invest all on what one is holding.
Inferencing Mr. Munger's maxim, a rare trading chance is considered AI message hint.
LCS takes the role of insurance against the possible failure of AI message realization in short term.
Repeating such successful trading, maximum profit can often be accomplished.
Thus, maximum profit generation process depends on both AI software and LCS.
If you want to find out, how they contribute to the high trading profit,
please click on Max Profit.
This is why LCS is so critical for trading success and AI is the best friend!
Please see an example below:
Stock-Telsa
Current Price - 689.68 (price information is at the far right side in a small white rectangular box by the side of blue line.
LCS in white color rectangular boxes at top far left corner.
BCS for buying -now 689.49; SCS for shorting -now 689.88
Stock-Telsa LCS role sample
Stock symbol TSLA(Telsa)
Date & Time: 3/23/2021 1:15PM
Trading volume in shares based on $132,000 / 673(top price) =
196.14 shares ($33,000 (current investment) x 4(leverage) = $132,000 (buying power)) Using 195 shares for the illustartion here Note price quote: top--> candle top; 2nd and 3rd prices -->candle bottom.
top 673
2nd price 667
3rd price 666 -- from top $7 off from top--> 195 shares x $7 = $1,365.
Where green line passes white line, price is $670.82(rounded 671).
If LCS could help the trader, he would reverse the side from buy to short at $671.
Trade result:
Price at which the trader shorted $671 - price at which he covered the short $666.
That is, $671 - $666 = $5.00 per share profit, gaining 195 shares x $5 = $975.
That is, he borrowed 195 shares and sold them at $671 and
bought them back at $666 and returned the borrowed shares, netting $5 profit per share.
However, the trader lost $2 x 195 = $390(He bought 195 shares at $673(top price) with LCS set at $671, and LSC was fired at few minutes later unfortunately)
Summary:
LCS cut down the loss to $390. In addition, LCS led the trader to reverse the side to shorting at $671 per share and later buying back at $666, profiting $5 x 195 = $975.
Reducing the total profit, $975, by the loss, $390, from the first buying trade,
the net profit here is $585.00. This is a good example of Loss Profit.
Notice the price plunged further later, and that could be another good chance for the trader to reap large profit amount.
Only AI and LCS could produce such outstanding trading result.
Now, you know why LCS is the catalyst here!
Thanks for reading a dull trading jargon! Your patience has been great!
