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Simon, can you please clarify this statement of yours more for us?

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Not applicable
During the courses and on this website you always mention the price when trading. You say "trade the price". I have studied your warrant selection citeria on tickertalk and that makes sense. The "trade-the-price" bit is not all that clear. It is almost like you are telling us that all the bad news or good news plays no role and all that matters is the price. Will you expand on this comment of your please? It seems that even after making a selection of the warrant you want to trade, there is something else that comes into play.
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28 REPLIES 28
SimonPB
Valued Contributor
two thorts .. firstly, the warrant selection is merely the instrument and largely irrelevant to the trade, yes you want the best warrant but that is not part of the 'trade' merely the method ..

trade the price is just as you say, ignore everything, except for the price .. all the news/data etc. is just noise and while we believe we can absorb it all and make sense of it, we can't .. so forget about it and use the price to tell you when to buy/sell .. in other words your chart will give you the set up and the confirmation .. then you just wait for that level and you trade it ..
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Not applicable
Okay thanks for that. Bad news tend to make some things cheaper and you can buy more and good news make thinks more expensive and you get less bang for your buck. Does this not play a role at all? Must you ignore this factor - I know it is sort of a greed factor to want to buy at the cheapest price. What I am asking is this - you have idnetified the warrant you want to buy. It cost 30c. You buy, but the next day becuase of short term bad news is drops by 5c to 25c. It is stil an great company or whatever. Do you never ever go in and buy more at 25c? Do you always get out when it drops, come hell or highwater?
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SimonPB
Valued Contributor
the bads news makes it fall, but there was no way of knowing the bad news ahead of time .. hence ignoring the news .. and when a trade goes against me I never add to it .. adding to loser trades makes no sense .. I just wait for the stop and exit ..
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Levitt
Regular Contributor
Averaging down is quite dangerous, especially on a time sensitive instrument like warrants.
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Okay so to sum it up: 1. Make you selection 2. Buy in accordance with your setup criteria 3. Sell when it hits the stop come hell or highwater. No deviation is allowed at all. Sounds like something you could program into a mechanical trading system.
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Simon, I also get the idea that you, out of years of experience, prefer some warrants over others. For example would you trade alsi warrants or is it to exposed to the "elements - good and bad news? I am not sure if you get index warrants for satrix and things like that. Do you? If you do, do you ever trade them? Do you trade sunflower or maze or things like that? You must have a preference that you build over the years. What is it and why? Yep I am pushing my luck to find out a secret or two, but it is all part of the learning curve.
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Simon, does this mean you are a purely technical trader. What about EMH and the studies they've done? Do fundamental play no part in your system?
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SimonPB
Valued Contributor
in my trading system, no fundamentals .. just the chart .. investing another story ..
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SimonPB
Valued Contributor
not so much about warrants .. I prefer trading indices over stocks every time .. less volatile .. sof comms are on my list of things to trade, when we launch them for trading here ..
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SimonPB
Valued Contributor
to expand further .. I want uncorrelated products with limited volatility .. the instrument I actually trade less important (not with standing some issues around risk/spread/etc) ..
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DST
Super Contributor
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mikki
Contributor
Good thread as I need to get back to the basics
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Not applicable
I prefer trading indices over stocks Can I ask you what indices? The only warrants that I can see is on the TOP40.
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SimonPB
Valued Contributor
there is the fini15, indi25 and resi20 via CFD's (using the STX product), and spreads can be a problem .. I am currently trying them ouut witht he lazy system .. and then also ALSi futures .. but correct that with warrants the only option is Top40 ..
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Not applicable
YEG!! CHOO!!! CFD's and SFF's are all those "bottemless pit" stuff where you have to keep adding till you're dry. With something like 24 ETF's out there, can't we get warrants to trade on them? They are big and low risk like the top40 companies.
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SimonPB
Valued Contributor
issuers ahve done warrants on etf's before .. but when you take the etf spread, then put it through the warrant pricing model .. mon you get a spread wide enough to drive a solar system through ..
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Not applicable
Hehehehe hahahah. Okay accepted, but that leads me to another item you have mentioned in your courses that is not clear. The words "spread" and "warrant pricing model". Lets take "spread" first. I have googled it and got everything from spread betting to xxx. Stay on track, stay on track! The xxx could be anything and not what most guys think! I understand that the "spread" is the difference/gap between the selling price offered and the buying price offered. Correct? I also understand that the warrant matrix is related to the spread and gives a guideline so that you do not overpay. Is this correct? What I don't understand is when the price of a warrant drops like mad and the spread gets big, it seems to turn into a risk of some sorts. If you can get the warrant on a good company at a bargain price, why is that a risk? Surely it will recover, close the spread/gap and continue up at some stage?
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SimonPB
Valued Contributor
you right about the spread.. but the quality company nnot so much .. thing is with a warrant you are fighting against time, many of our 'good' local companies are still well well off the highs ..
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