I have question about dividing the investable capital into various class. What will be a right balance.
like buy and hold types (slow growers)
Growth types (fast movers)
options etc
Honestly, unless you’re within 5-10 years of retirement then focus on growth. Once you’re that close then I’d put 10 years worth of money in income producing investments. At current interest rates, I wouldn’t touch bonds. Dividend aristocrat stocks yield more and never reduced their dividend even in the Great Recession. Who cares if the principal value varies as long as you keep receiving the dividend income?
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Asset allocation? Rental & stock equities. Like @marcus335, don’t like bonds.
Stock portfolio? Index fund, dividend paying, growth, trading (fast movers + options).
Frankly don’t use % to allocate nor think in terms of right balance so don’t do re-balancing as suggested by textbooks and pundits. I am not a textbook guy… you should know by now. I invest based on intent.
Index fund: Intent is to be inherited and serve as a replacement for life insurance. DCA purchasing, still doing.
Dividend-paying: Intent is to create a passive income for retirement in 20 years. Bought a bunch of stocks (mostly consumer staples/utitlities) for a few years, stopped building after AAPL started giving dividends, liquidated most of them.
Growth: Intent is to grow wealth 
, about 10% of net worth then, bought a bunch of stocks (many no longer exist), after 2000 dotcom crash, move all to AAPLs. After 2012, AAPL is the growth, buy n hold and dividend-paying stock.
Trading: Intent is to entertain myself, flip-flop with playing video games. So on and off, no consistency and don’t gamble big. Open an account and pump in $ amount to about 2% of net worth then. Strictly won’t add if lost all the $$$.
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which platform do you use for option trading ? When I traded a long ago, I used option house (sold to etrade since then) because it was the cheapest and I only had to enter trades, did not have to do my own analysis.
I see you miss a dozen of my posts.
ThinkorSwim, now belong to TD AmeriTrade which will be bought by Charles Schwab.
A little on Tom Sosnoff, founder of ToS. He talked a bit on options trading.
Cross posted
Did I say owning a stock is a speculation?
Anything (even the safest asset) can be speculation or an investment depending upon the understanding of two things:
- Safety of Principal
- Rewards/Risk Ratio
Speculating or investment is not the character of an asset but of the thinking that goes behind the money paid in to acquire that asset.
For example, if 9/10 startups fail, can investing in a startup be a speculation? But, it can also be rewarding. Can it be investing then?
What about the options? What about the penny stocks? What about the junk bonds?
Position sizing is important in situations like these. The amount and possibility of risk (loss) vs the amount and possibility of the gain.
crossposting
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explanation of chart above
cp
How do you distinguish between a successful break out and a failed breakout?
How much time should one wait for a breakout to be successful? When to abandon a position if the price moves out of the triangle and then shows no action, or actually returns to the triangle?
Momentum trader buys the breakout.
Swing trader buys at support.
You should read the book recommended by @marcus335 since the active stock traders here are mostly swing to position traders. You are asking a momentum trader’s question.
Anyhoo, breakout tends to retest previous resistance. It is why there is a need to place a sell stop just below the previous resistance in case it fails, the resistance should act as a support for a true breakout. I doubt there is a foolproof way to determine whether it is a true breakout or not, only rules to defend your ass. May be the book got some tip on this.
Btw, currently delta* for my SQ position is about 300, reduce from 1000 as it approaches the resistance, err on the safe side 
*Delta is kind of equivalent number of shares, one of the GREEK of options.
Thanks for the answer but I got more confused between swing , momentum, and position trading. I do not know what kind of trader I am. Which book are you referring to? Hope it is an easy read. Not too much of maths and stats.
Thanks a lot. This explains very well.
So to summarize
A momentum trader buys when the breakout is confirmed (price is above 3% resistance line) while the swing traders buys at the support (like in this case looks like 50 days SMA line). Correct?
That was about making an entry. How do you plan to exit? When to sell?
It’s a service not a book. I learned a ton about trading options. Books usually cover theory, pricing models, and are academic in nature. They don’t cover how to actually make trades.
See @marcus335’s comment below. You’re supposed to develop your own trading strategy
Anyhoo, common exit points are when stock declines below 9-11 days SMA (@marcus335 said he preferred 10-day SMA), use trailing sell stops/ conditional sells (refer to your trading platform), a fixed % gain or decline or a fixed dollar amount. Depends on your aggressive profile
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You catch a falling knife only if you are bullish about a stock in a bull market.
Ideally, you want a bullish divergence e.g. price with RSI or stochastic, oversold, and touching support such as horizontal, trend line, popular SMAs/EMAs e.g. 50-day, 200-day, 13-week.
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This is counter-intuitive. I though you catch falling knife when prices are falling under illusion that prices are low.
What does the above line mean? What do you want bullish divergence for? For a falling knife to happen ? Or you want to buy during bullish divergence? What is bullish divergence? When prices are moving upwards while the indicators are bearish?
Thanks. I am cross-posting in the tricks thread