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December 2, 2008
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This is a stock I'd like to hold through the recovery. I like it as a long term investment for a number of reasons. But I was getting tired of sitting here making no money while I wait for the market to recover. And I don't have time to be one of those eight screens up at once daytraders.
I wondered if I could put DXPE's volatility to work for me without spending a lot of time babysitting it. So I finally took the time to decipher Ameritrade's conditional ordering.
It was a lot simpler than I thought. I went to Trade: Stock and entered a buy order for DXPE at $11.55. At the time, that was the low, established a few days prior. Then I hit the checkbox for "make this a conditional order" and selected "One Triggers Another."
The second order, which would be entered only if my buy order filled, was a sell order for all of my newly purchased DXPE, at $12.90.
It turns out I wasn't very ambitious with my buy order. After it filled on November 10, DXPE dropped to $10.24. However, only a couple of weeks later, my sell order which had been automatically entered, filled at $12.90, getting me a tidy 11.6% return (minus $19.98) in a couple weeks' time.
It seems to me the key to this approach is to find stocks which meet both of the following conditions:
1) You like the long term outlook well enough that you won't mind riding it out if you don't meet your sell limit right away.
2) It makes wide enough swings over a week or two of trading that it makes sense to sell it to book your gain and pick it up again later at a discount.
I tried screening for more stocks like this on Zacks.com. I used Zacks Rank of 2 or better as a shortcut for earnings strength, and added a beta of 3 or more for volatility. I'll post them here if any of those picks pan out.
