Don't pay dollar to keep 2 cents when wrong. Cut your losses quickly. Trade what you see, not what you think.
Joined Oct 26, 2011
719 Blog Posts

Leverage or High Beta?

My trading style is all about high beta.  While some of you may leverage yourself to the hilt with $AAPL stock, I load up on high beta stocks using cash.

Both styles are obviously high risk with a high reward scenario; however, I’m more likely to walk home with a few more buck than those who leverage to the hilt when the market crash or the stocks in question crash.  These few bucks that I still have after the calamity will give me another chance to make a come back by buying, you guess it, high beta stocks.

Since I trade biotech, which by nature is high beta, a lot, I’m always subjected to high risk at all times.  Thus, in order for me to survive, I’ve to be quick in my execution.  I try not to think too much when I trade.  You can say I trade by reaction.

Below is an example of my thought process:

This morning, $BBRY opened higher but then started heading lower.

“Hey, $BBRY looks good at the open”

“Wait a minute, $BBRY is tanking”

“It dipped to negative territory in 6 min after open!”

“I’m still in the money.  I’ve not given back too much yet.”

I looked at the daily bar chart and compared today bar to the previous day bar.

“Not looking good.  I’m taking my money now.”

I clicked the mouse button to sell all my $BBRY shares to close.


All three 3D printer companies headed higher after open; but then after 10:00am EST, both $DDD & $SSYS began to tank.  Meanwhile, $XONE was fighting the downdraft and even bounced back up after falling off a bit.

“XONE is holding well despite $DDD & SSYS tanking.”

“XONE is dipping… not yet, it is holding…and bouncing back up”

“Give it a few more moment”

“Holy Smoke! DDD is crashing and look like SSYS is following through.  XONE is still holding… impressive!  But I’m not going to wait for it.  I still have profit so I’m taking it.”

Click, click, & click.

I’m out to lock in profit.

$DCTH opened up at the open and then after 20 minutes began to tank.  It went into negative territory and dropped quickly to the gap-filled area of $2.04 which I postulated was a good support.

“No way! Already? Let’s see if it will stabilize.”

“There is a lot of bid in there.  Maybe it will hold.  Wait…”

Meanwhile the bids size increased and price looked like it might hold.

“Looking good.”

10 minutes later, the sizable bids had all been hit and price started to tank.

“Holy smoke!  I’m getting near the breakeven mark!  I’m getting out now while the bids are there to take my load.”

“Maybe I can buy them back below $2.”

Click, click, & click.

Out of $DCTH at breakeven level.

And this is pretty much how I think during trading. Really, there wasn’t much to think but to express short burst of emotion in reaction to the price action at the time.   I know what I’ve to do and I strive to do it quickly.  There were times I hesitated just a bit and the stock god took that opportunity to punish me.  A few seconds of hesitation and someone took away the bids I needed to get out without tanking the price further down.  Darn!  Then you had to scrambled out before others jumped ahead of you.  Sometimes, it was the right thing to do ’cause price just kept on tanking after I had gotten out; but sometimes I just happened to sell at the bottom for the day.  Yeap, it happened!

$DCTH was a good example today.  Now, in hindsight, it would be nice that I took profit at the open; but you should not think like that.  You just have to deal with the hand (like a poker hand if you will) you have at the moment.  I was given the choice to get out at breakeven and I took it.  Right after I took it, price continued to tank further down and broke under $2.  I bought back some shares to see if the bounce had leg but it didn’t.  I dumped it when price went back down to the low $1.9x area.

Did I think about what if price went back up after I got out at breakeven?

Sure but that was the least of my worry at the moment.  I was more worry about turning my gain into loss!  As far as I’m concerned, I do not have the same “trust” in $DCTH as I’ve for $USU, $AMRN, $LRAD, and even $SZYM.  Therefore, I’m not willing to hold this one against me after I was sitting on a gain.  This thought process simply pushed away any thought that I could be getting out at the bottom of the correction.

Thinking about it, perhaps my username should be called “High Beta Trader”.  Feedback anyone?

My 2 cents.




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  1. Le chiffre

    Always good to hear how other traders think/execute. Thanks for the peek into your process.

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    • Zenhunter

      Thanks for letting me know. I had always wanted to know how other traders thought process was like when I started; so I thought I would provide the same…


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