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Case Study : Overstock (OSTK)

Overstock.com , Inc. [Nasdaq: OSTK] is an online retailer and technology company based in Salt Lake City, Utah. Its leading e-commerce website sells a broad range of new home products at low prices, including furniture, décor, area rugs, bedding and bath, home improvement, and more. The online shopping site, which is visited by tens of millions of customers a month, also features a marketplace providing customers access to millions of products from third-party sellers. Patrick Byrne (founder and former CEO) bought Deals.com in 1999 and rebranded the international retailer to Overstock.com. In its early years, Overstock.com gained a reputation for bargain prices and “steals,” which led to early success earning $25.5 million in year two and $80 million in year three. In 2002, Overstock.com went public and earned nearly $100 million in gross revenues. Between 2011 to 2019, Overstock’s revenue grew at a CAGR of 4.14% - not very exciting is it? As with many online retailers. Overstock...
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5 Rules to Play the Long Game

Buy the business, not the stock Never only invest in a stock but invest in the business. You are investing in a business and not just the ticket symbol of the company. O nly invest in a business you understand. In other words, before investing in a company, you should know what business the company is in. Timing the market is futile One thing that Warren Buffett doesn't do is to try to time the stock market. He has a very strong opinion on the price levels to buy and sell for individual shares, but he does not know if will go up or down. Majority of investors  do just the opposite and try to time the market and try to make short term investing decisions because of this. So, never try to time the market. In fact, nobody has ever done this successfully and consistently over multiple stock market cycles. Investing Is More Luck Than Talent When you try to time the market, you have two critical decisions to make. First, you need to know when to buy, at or near the low point in the marke...

The TOP 3 DOs and DONTs To Be a Successful Investor

Many times we ask ourselves "Why do some people make money easily while I have a difficult time doing so?". I already have a few friends who are making tons of money after huge investment in crypto and I have another friend who has made tons of money in options trading. I am still struggling and I have been asking myself why. What am I lacking compared to them? I believe it is the amount of effort and time that my friends have placed to master the art of trading and investing -that make them successful. They will only focus on one thing and continue to sharpen that skills and knowledge relevant to that instead of jumping from one to another. For my case I have dabbled in the futures market, day trading, options, some crypto....all with mild or no success.  It is time for a change.  I have to put in more effort to be a more of a successful investor. knowledge without action is meaningless. We must Do the right things and DONT Do some things that may hinder our progress to be s...

A Study in Technical Analysis : Candlestick Part 2 - One Black Crow

  Here is the link to my previous article on A Study in Technical Analysis : Candlestick Part 1 - One White Soldier  :   Link ONE BLACK CROW One Black Crow candlestick pattern is a Bearish Reversal Pattern used to predict the reversal of the current uptrend. The pattern consists of two consecutive long-bodied candlesticks - The first being a Bullish Candlestick followed by a Bearish Candlestick. This candlestick pattern rarely appears and if it does appear it can be quite strong. The One Black Crow should have the following  characteristics. Bullish Candle followed by a Bearish Candle.  If it is during a long uptrend, The Bullish Candle must be a new high in the downtrend(Counter Trend Trade).   1.   The Bearish Candle must open Below the Close of the Bullish Candle Open2 Lower than Close1   2. Must make a lower high. High2 Lower than High1   3. The Bearish Candle must close below the low of the Bullish Candle. Close2 Lowe...

A Study in Technical Analysis : Candlestick Part 1 - One White Soldier

Decided to start a Technical Analysis series to analyze a few candlestick patterns and other tools to help me improve my stock and options trading.  ONE WHITE SOLDIER One White Soldier candlestick pattern is a Bullish Reversal Pattern used to predict the reversal of the current downtrend. The pattern consists of two consecutive long-bodied candlesticks - The first being a Bearish Candlestick followed by a Bullish Candlestick. This candlestick pattern rarely appears and if it does appear it's likely a strong indication of a reversal in trend (supported by other indicators as well). The One White Soldier should have the following  characteristics.  Bearish Candle followed by a Bullish Candle.  If it is during a long downtrend, The Bearish Candle must be a new low in the downtrend(Counter Trend Trade).   1.   The Bullish Candle must open Above the Close of the Bearish Candle Open2 Higher than Close1   ...

Using Linear Regression Channels

  I am currently using Linear Regression Channels in ThinkOrSwim (TOS) to try to time when I should enter my options trades. I have that added into my TOS chart and I am now trying to improve myself using this tool. Linear Regression Channels are a great way to identify potential key levels of future price action by graphing the normal distribution of a trend.  Two points on a trend are chosen, generally at the beginning of the trend and the end of the trend. W hen the two points on the chart are chosen, the normal distribution of the dataset is calculated between the two chosen points and displayed in the form of a linear regression channel. The center line in this channel is the Linear Regression Line or Mean, and the upper and lower lines are the Upper and Lower standard deviations from the mean as set in the tool’s settings (default settings are +2 and -2 standard deviations from the mean). I usually uuse +1,-1 (50) and +2, +2 (100) in TOS.  The correlation of this li...

Trading Journey [ Part 2 ] - Consistent Set of Actions

The month of March2021 had been a rather rough month for me. I lost 100% in my Sell Put strategy for SPY due to the crazy volatility caused by the 10 year yield scare. I have since adjusted my Stop Loss to be triggered at 250% instead to avoid being stopped out from price volatility. I closed my PEPSI sell put option by manual cut loss 21 days before  expiration which ended up bring profitable if I didn't cut early...another reason to stick with the original game plan instead of tweaking my exit plan halfway after entering the trade. I just realized 100% losses from my bull put strategy on APPLE and JNJ.   The losses was a bit hard to take and do I decided to take more risks by not sticking with my game plan for my overall trading strategy and added more options trades which did not follow my rules and went beyond my trading size. Once such trade is I did a SELL Iron Condor on Facebook when it was trading at $260. I looked at the chart and saw it was in middle a strong Re...