Good morning everybody!
So, I awoke today intent on trying out my new trading strategy - the Superheroes day trading strategy. The idea is to watch stocks that are volatile, identify good candidates for a midday rise and then to trade the uptrends.
I ran the Superheroes market scan from Stockscores and didn't like what I saw. In order to get myself more candidates to consider, I decided to try the Globe and Mail Report on Business Market Action page. At the bottom of the page are boxes showing the biggest gainers and losers during the day from each index. I look specifically at the US Indicies as it seems to be easier to trade US rather than Canadian stocks right now on TradeFreedom. I need to learn a bit more about the symbols for Canadian stocks and how to get the info in the TradeFreedom platform.
My idea is to grab the top 100 losers from the NSE and Nasdaq pages to see which stocks have trended down most of the day (I'm doing this scan today after two hours of trading although it can be done as early as one hour into trading). I will then enter each of the symbols from these top 100 loser lists into my trading platform and look for charts that show a good set-up.
I am specifically looking for stocks that had a steady downtrend, but seemed to have stopped out on the downward trend. I then want to see a bit of sideways movement, preferably with rising bottoms, to a clearly defined trend line.
In my scan of the first 10 stocks on NSE (listed in order of biggest % losses), I find three candidates - FUN, PFE, TWI. In addition, my friend from Friday, MSCC, has also had a big uptrend followed by a big downtrend today. I want to watch these four stocks to see what develops.
Let's look at all three around 9:45 am.
MSCC opened at 8.11 but rose within the first hour to 8.84. It had a bursting bubble candle and then started a steady decline which seems to have stopped out around 8.10. As I watch right now, it has clearly broken it's downward trend line and has begun to rise again. It did not move sideways much at all. It seems first intermediate resistance is around 8.40 with secondary resistance up at 8.84. It seems like the entry signal came about 8.25 with support at 8.12 (0.13 risk). With initial resistance at 8.40, we only have 0.15 of upside to 0.13 of downside, so this trade is not ideal. We'll keep an eye on it to see if we learn anything on how the stock performs. Stay tuned.
FUN opened at 11.92 and steadily moved lower. The stock seemed to bottom out at 10.55 and then move horizontally with rising bottoms. I saw support at 10.60 and resistance around 11.15. Entry was at 10.69 giving 0.46 of upside and .09 of downside, a 5-1 ratio. This trade was attractive enough that I enter a 150 share position. If the stock fell below 10.60 on the 1 minute chart, I was out. A break of 10.75 would mean the stock was on its way up. Unfortunately, the stock broke down from its rising bottoms and I exited at 10.51. A closer look at the 2 minute chart over the past two days shows that the stock has yet to break its longer term down trend. It had simply broken its shorter term downtrend from today. Time frame analysis!
TWI seems to have suffered from the same issue as FUN - a breaking of its short term downward trend line but not a longer term downward trend line. It is not a good trade.
PFE appears to have broken its downward trend line after gapping down at the open. But its short term resistance is not sufficient to garner a good risk-reward ratio. This is not a good trade.
Let's switch over to the Nasdaq and the above stocks alone....
Okay, so it is now just before the close. Here is a summary of my day since I exited FUN.
I indeed checked out the market movers from Nasdaq but could not find anything worth tracking. I did, however, keep my eye on MSCC throughout the day as it seemed to be consolidating in a pennant pattern with rising bottoms. I saw an entry point at 8.28, with support at 8.19. As I mentioned earlier, I saw short-term resistance at 8.40ish and longer term resistance at 8.84. I bought 100 shares.
Guess what happened? The stock fell below support and I exited at 8.15.
My analysis: I fell in love with this stock. I remembered my success on Friday and bent my rules a bit. I allowed shorter-term resistance around 8.35 to be ignored and also ignored a slight falling top. I saw what I wanted to see and ignored the rest. The stock did fall below support but closed the day moving horizontally. I did not get the entry signal that would have precipitated entering a trade.
After this, I kept watching some day trading stocks but did not see anything favourable I turned my attention to a couple of swing trades, Overnight Holds and Pull Back Plays. Nothing on the Pullback plays caught my eye but I did see two stocks on the Overnight holds which I believe satisfy the rules laid out in the strategy on Stockscores - DPW and PLG.TO.
They have moved a bunch today but have been steady into the close. I hope to catch early morning emotion from people who failed to get in on the action today which will push the stock higher early. I will exit if my play is incorrect, that is if the stocks close below support on the 1 or 2 minute charts. If they gap lower, my risk is higher obviously. If they go up, then I will ride the upward trend until I get an exit signal.
Let me detail my two buys:
DWF just signed an agreement with Cisco, obviously a good thing for any small company. It usually has lower volume but today moved up on higher volume about 37.5%. That should catch some people's eyes overnight so that there will be some buyers in the morning. This is a low volume stock and it did not close around its high for the day, so I may be in trouble. We will see. My entry was at $1.09 with support at $1.05. It is right at longer term resistance, so any move to the upside is likely to be short lived. I have to be ready right at the bell tomorrow.
PLG.TO is a mining stock that delivered some favourable news about one of its properties. It closed up about 35% today, which should also catch some people's eyes looking for strngth in the seriously depressed commodity sector. Unlike with DWF, this stock closed at its high and was stable into the close. Volume was abnormal today but it tyically has decent volume. I entered at $2.14 and support is at $2.08. Longer term resistance is around 2.70.
So, I will see you tomorrow at the bell. Keep your fingers crossed.
Mike The Diversified Trader
Monday, January 26, 2009
Sunday, January 25, 2009
A Quiet Week and then...
Greetings Invisible Audience,
A quick correction - for some reason I indicated I entered a position trade on MGI on January 15th. Actually it was SLM. I have no idea how I made this error in my reporting to you, forgiving reader, but I did. I also said there was $1 of downside when in fact there was $2 of risk to $5 of upside. Still a good risk-reward ratio but not the slam dunk I thought it was. This just goes to show how messed up your head can get during the heat of battle. Scary and a cautionary tale. See, I continue to learn lessons.
Last week was mostly quiet as I held SLM all week as it kept right around my entry point just below $12. Since it was a position trade, I needed to be careful not to follow it too closely as day-to-day swings were not as important as closing prices. To tell the truth, it got kind of boring. I want to trade more actively and, sitting on a stock, watching it daily instead of throughout the day, was not what I signed up for.
But I was in this trade and I needed to stick to my rules. I had set support at $9.74, so if the stock closed below that, I needed to accept my loss and move on. On Tuesday the stock looked to move higher, topping out at about $12.40. Unfortunately for me, that was where it stopped out. It dipped a little lower and then gapped down Thursday - not as far as support but significantly down. I didn't check in until 11 am PST time Thursday so a lot of damage was already done. I held on to the stock through the close (sticking to my rules) although I had considered selling it out of fear around 10.75.
Friday morning I rose with the rooster and started to watch the stock. It started down and kept shooting down, below my support level. It seemed destined to keep going forever. I exited at a 9.39 for a loss of $2.40 per share. Good christ! Predictably the stock rose from there although it did end up closing below my established support level. One could argue I should have held out until day's end to see if it would indeed have closed below my support level, but I panicked and wanted out.
A post mortem on my decision making shows a lot of emotion. Maybe I should have moved to 15 minute candles and sold immediately on the gap down Thursday morning. Maybe I should never have entered this trade in the first place since it had not clearly pushed through resistance but was just dancing around it. A little time will allow me to look at the trade more objectively. In the near term it still stings so it is difficult to look at it objectively.
One thing I did do after exiting SLM, though, was start to put some Superheroes strategies in to play. I identified a few watch stocks that fit the strategy - look for volatile stocks and try to trade the trends on 1 or 2 minute charts. Do not hold the stocks through the close of the day. Of course, risk-reward rules and clear support levels must be established and respected.
I looked at MSCC and saw it consolidating with rising bottoms around resistance after a significant drop to open the day. I saw a likelihood to go higher, to reclaim some of its losses, and that i could get in at a low risk per stock. I bought 200 shares around 7.97. Sure enough, the stock broke out and rose up above $8.50. On the 1 minute chart I saw a bursting bubble candle. This led into a falling top, so I exited at 8.39 for about an $80 US profit, or a 5% gain.
I felt really good about this trade. I felt like I made correct decisions on both entry and exit, remained patient and was rewarded. I was able to watch the stock in real time, thus limiting my exposure to large gaps. I am going to try this again tomorrow - Monday. As Happy Gilmore said, "I should just try to get the ball in the hole on one shot everytime!"
Stay tuned!
Mike The Mixed Bag Trader
A quick correction - for some reason I indicated I entered a position trade on MGI on January 15th. Actually it was SLM. I have no idea how I made this error in my reporting to you, forgiving reader, but I did. I also said there was $1 of downside when in fact there was $2 of risk to $5 of upside. Still a good risk-reward ratio but not the slam dunk I thought it was. This just goes to show how messed up your head can get during the heat of battle. Scary and a cautionary tale. See, I continue to learn lessons.
Last week was mostly quiet as I held SLM all week as it kept right around my entry point just below $12. Since it was a position trade, I needed to be careful not to follow it too closely as day-to-day swings were not as important as closing prices. To tell the truth, it got kind of boring. I want to trade more actively and, sitting on a stock, watching it daily instead of throughout the day, was not what I signed up for.
But I was in this trade and I needed to stick to my rules. I had set support at $9.74, so if the stock closed below that, I needed to accept my loss and move on. On Tuesday the stock looked to move higher, topping out at about $12.40. Unfortunately for me, that was where it stopped out. It dipped a little lower and then gapped down Thursday - not as far as support but significantly down. I didn't check in until 11 am PST time Thursday so a lot of damage was already done. I held on to the stock through the close (sticking to my rules) although I had considered selling it out of fear around 10.75.
Friday morning I rose with the rooster and started to watch the stock. It started down and kept shooting down, below my support level. It seemed destined to keep going forever. I exited at a 9.39 for a loss of $2.40 per share. Good christ! Predictably the stock rose from there although it did end up closing below my established support level. One could argue I should have held out until day's end to see if it would indeed have closed below my support level, but I panicked and wanted out.
A post mortem on my decision making shows a lot of emotion. Maybe I should have moved to 15 minute candles and sold immediately on the gap down Thursday morning. Maybe I should never have entered this trade in the first place since it had not clearly pushed through resistance but was just dancing around it. A little time will allow me to look at the trade more objectively. In the near term it still stings so it is difficult to look at it objectively.
One thing I did do after exiting SLM, though, was start to put some Superheroes strategies in to play. I identified a few watch stocks that fit the strategy - look for volatile stocks and try to trade the trends on 1 or 2 minute charts. Do not hold the stocks through the close of the day. Of course, risk-reward rules and clear support levels must be established and respected.
I looked at MSCC and saw it consolidating with rising bottoms around resistance after a significant drop to open the day. I saw a likelihood to go higher, to reclaim some of its losses, and that i could get in at a low risk per stock. I bought 200 shares around 7.97. Sure enough, the stock broke out and rose up above $8.50. On the 1 minute chart I saw a bursting bubble candle. This led into a falling top, so I exited at 8.39 for about an $80 US profit, or a 5% gain.
I felt really good about this trade. I felt like I made correct decisions on both entry and exit, remained patient and was rewarded. I was able to watch the stock in real time, thus limiting my exposure to large gaps. I am going to try this again tomorrow - Monday. As Happy Gilmore said, "I should just try to get the ball in the hole on one shot everytime!"
Stay tuned!
Mike The Mixed Bag Trader
Thursday, January 15, 2009
Back to Rational Thought
Guten morgan!
I thought I would try something new today - live blogging! I will see if I make clearer decisions and stick to my rules better with my conscience on display. No cheating, just truthful reporting on my daily trading moves, thoughts, experiences, and decision-making. Plus, perhaps the excitement level will go up, dear reader(s), if you and I can share the anticipation of the unknown together. Who knows? I realize this isn't the 7th game of the Stanley Cup Finals, but it is kind of sporty in a geeky sort of way.
So, if you will remember back to yesterday's market bloodbath, you will remember that I lost my head. I let my overnight hold (TSYS) fall well before support before selling at a big loss. I then day traded a couple of stocks hoping for a rebound. I finished the day by reclaiming my position in TSYS and looking for a bounce back to the upward trend.
With the benefit of a night's sleep - albeit a short night's sleep as I was up late skiing and the markets open early here in the Pacific Time Zone - I realize things could have been much worse yesterday and I am happy for the lessons. I am happy with my decision to start this blog. I feel good for my future prospects.
7:15 AM: I had a closer look at my position in TSYS. There are a couple of ways of looking at things. The first is that the market pushed almost all stocks significantly lower in the first 90-120 minutes yesterday. If we look at TSYS without those first two hours, it has been quite stable. I can hold my position, establishing support at 7.30, and ride the 15 minute charts to whatever happens. Or I can exit and try and start fresh.
I sit and mull my level of support. 7.30 was the low of the last pullback, but 7.26 was the low of the move yesterday. As I waffle over which support level to respect, bam, down goes the stock. It shoots right through both levels of support and within minutes is below 7.10. This is too risky, it is time to cut bait. I exit at 7.11 and don't look back. Bye bye TSYS.
There is always the benefit/agony of hindsight. Of course I could look back at TSYS and watch what it does from now on, but really that will do almost no good. I let the stock slip through support yesterday at the open and foolishly bought it agan near the close. It was likely to continue lower and it did. My bad.
So now what do I do? I have $2,638 CDN sitting in my account. (For the record, my trading over the past two days has lost me $362, a little over 10%. Do you see what happens when you don't follow rules?)
My options are:
1. Wait for the last hour and check the Pullback play candidates. Enter of there is a candidate.
2. Become a day trader and trade the Superheroes strategy which basically plays interday trends.
I am going to do both but I am going to be smart about it. It is time to go back to my original idea of papertrading. I will papertrade the Superheroes strategy today to make sure I understand the principles and that I can make money trading it. I will exit my "live" trading platform and login to my demo account. Stand by.
Okay, TradeFreedom's demo account isn't working for whatever reason. I could call the support line but I actually am a little tired so I am going to change my mind about the Superheroes strategy for today and check back in the last hour to see if there are any Pullback play candidates worth considering.
Stay tuned....
12:30 pm Okay, back again. I have run market scans for Pullback Plays, Overnight Holds and Hitting Floors and nothing is looking particularly inviting. I have gone back over some watch stocks from the past few days and MGI caught my eye. This is a stock that has been flirting with resistance for the past few days. It seems like it has pushed through it, just eclipsing the high from back in October in the past couple of days. It is up through resistance today, although it has pulled back just below it, and I am going to enter a position anticipating a breakout.
My rationale is that this stock has broken through resistance several times over the past few days, has not backed down from it and looks like it wants to go higher. It is just a question of shaking out some skepticism.
So I am entering a Position trade of 175 shares at 11.79. I will hold this stock through resistance or until it breaks through support of $9.74. The next major resistance is at 16.75 giving me a reward-risk ratio of 5-1.
If I am wrong on this stock it will be because my prediction about this resistance level was wrong.
In the meantime, I will work with TradeFreedon to get my demo account live so I can continue to practice my papertrading.
Until tomorrow!
Mike The Skeptical Trader
I thought I would try something new today - live blogging! I will see if I make clearer decisions and stick to my rules better with my conscience on display. No cheating, just truthful reporting on my daily trading moves, thoughts, experiences, and decision-making. Plus, perhaps the excitement level will go up, dear reader(s), if you and I can share the anticipation of the unknown together. Who knows? I realize this isn't the 7th game of the Stanley Cup Finals, but it is kind of sporty in a geeky sort of way.
So, if you will remember back to yesterday's market bloodbath, you will remember that I lost my head. I let my overnight hold (TSYS) fall well before support before selling at a big loss. I then day traded a couple of stocks hoping for a rebound. I finished the day by reclaiming my position in TSYS and looking for a bounce back to the upward trend.
With the benefit of a night's sleep - albeit a short night's sleep as I was up late skiing and the markets open early here in the Pacific Time Zone - I realize things could have been much worse yesterday and I am happy for the lessons. I am happy with my decision to start this blog. I feel good for my future prospects.
7:15 AM: I had a closer look at my position in TSYS. There are a couple of ways of looking at things. The first is that the market pushed almost all stocks significantly lower in the first 90-120 minutes yesterday. If we look at TSYS without those first two hours, it has been quite stable. I can hold my position, establishing support at 7.30, and ride the 15 minute charts to whatever happens. Or I can exit and try and start fresh.
I sit and mull my level of support. 7.30 was the low of the last pullback, but 7.26 was the low of the move yesterday. As I waffle over which support level to respect, bam, down goes the stock. It shoots right through both levels of support and within minutes is below 7.10. This is too risky, it is time to cut bait. I exit at 7.11 and don't look back. Bye bye TSYS.
There is always the benefit/agony of hindsight. Of course I could look back at TSYS and watch what it does from now on, but really that will do almost no good. I let the stock slip through support yesterday at the open and foolishly bought it agan near the close. It was likely to continue lower and it did. My bad.
So now what do I do? I have $2,638 CDN sitting in my account. (For the record, my trading over the past two days has lost me $362, a little over 10%. Do you see what happens when you don't follow rules?)
My options are:
1. Wait for the last hour and check the Pullback play candidates. Enter of there is a candidate.
2. Become a day trader and trade the Superheroes strategy which basically plays interday trends.
I am going to do both but I am going to be smart about it. It is time to go back to my original idea of papertrading. I will papertrade the Superheroes strategy today to make sure I understand the principles and that I can make money trading it. I will exit my "live" trading platform and login to my demo account. Stand by.
Okay, TradeFreedom's demo account isn't working for whatever reason. I could call the support line but I actually am a little tired so I am going to change my mind about the Superheroes strategy for today and check back in the last hour to see if there are any Pullback play candidates worth considering.
Stay tuned....
12:30 pm Okay, back again. I have run market scans for Pullback Plays, Overnight Holds and Hitting Floors and nothing is looking particularly inviting. I have gone back over some watch stocks from the past few days and MGI caught my eye. This is a stock that has been flirting with resistance for the past few days. It seems like it has pushed through it, just eclipsing the high from back in October in the past couple of days. It is up through resistance today, although it has pulled back just below it, and I am going to enter a position anticipating a breakout.
My rationale is that this stock has broken through resistance several times over the past few days, has not backed down from it and looks like it wants to go higher. It is just a question of shaking out some skepticism.
So I am entering a Position trade of 175 shares at 11.79. I will hold this stock through resistance or until it breaks through support of $9.74. The next major resistance is at 16.75 giving me a reward-risk ratio of 5-1.
If I am wrong on this stock it will be because my prediction about this resistance level was wrong.
In the meantime, I will work with TradeFreedon to get my demo account live so I can continue to practice my papertrading.
Until tomorrow!
Mike The Skeptical Trader
Wednesday, January 14, 2009
January 14th - Mike loses his head
Howdy campers.
This will be a brief post because I have to go night skiing in a few minutes (life in Vancouver is awful, by the way).
As mentioned during January 13th's post, I went to bed last night dreaming of daily 2.5% returns. I was holding a position of 300 TSYS which had performed as expected in my first day of trading. I awoke in time to catch the opening of the markets - that's 6:30 am here on the West Coast.
Lo and behold, the markets opened sharply down. Macro-economic forces were reeking havoc on stocks indiscriminantly. TSYS fell below my support level and I hesitated. I thought, "Hey, it's not the stock, it's the market. My stock is still a good one." (ego!) So I held, expecting a bounce. The bounce came but by that time it was too late - I had already sold on panic (emotion!). I exited at 7.36. I was satisfied to see if fall even lower to 7.26 before reversing course.
Meanwhile, I violated another pledge of mine by deciding to try and take advantage of the inevitable bounce so many stocks were going to take during the day. I was suddenly going to day trade and make some of my money back. In retrospect, I guess things could have turned out worse.
Using various market scans I found a few stocks to watch. Shortly after 8 am local time (11 market time), I identified a stock (ELD.TO) that had broken its downward trend and reversed its direction. I bought 300 of these and rode this stock higher until it changed direction again and headed lower. I sold my 300 at a profit of $0.05 each, which actually lost me money once you factor in commission.
I then bought 300 FRPT @6.56 which also seemed to be breaking its downward trend and moving higher. Unfortunately this was a false start and I exited @6.52 for a loss of $12 US plus commissions.
Finally, I saw my old friend TSYS breaking its downward trend. I jumped on board at 7.44. I saw this stock rise as high as 7.52 before turning downward again. By this time I had admonished myself for becoming a day trader, recommitted myself to sticking to Swing Trading, re-established support for TSYS at 7.30 (the low of the inflection point on the 15 minute chart) and waited for the quiet close. This came at about 7.37. Somehow somebody snuck a 7.25 sale in there at the bell but I think that must have been an anomoly. I will see how TSYS reacts tomorrow. If it closes below 7.30 on the 15 minute chart, it is time to exit. Hopefully it can resume its pull back play and rise towards it's previous high of 8.78.
Some things I learned today:
- if the market is acting all negative and your stock is taking a beating pushing it below support, sell and wait out the craziness. Once the market has settled, look to re-enter a position in a stock meeting the criteria today for a pull back play strategy. It may even be your original stock but it does not have to be.
- your money doesn't need to be in a position. Let it sit if the market is doing crazy things.
- do not become a day trader just because. If you are going to trade a particular trading strategy, day, swing or position, follow the steps for developing a trading strategy and implement them in a structured and orderly way. Don't call an audible. The market isn't going anywhere and many other opportunities will come. Trading erratically is bad for business.
I am sure there are other lessons from today but they will need to be added in a future post. Today was a scorched earth day. I am lucky to really only be out my commissions on my later trades. Hopefully I do not get burned early tomorrow by that late trade on TSYS which pushed it below my support.
I will need to be back at my computer early tomorrow to see what happens.
In conclusion, I will further admonish myself for use of the word "hopefully" twice in my discussion of tomorrow's performance of TSYS. There is no room for hope in the market. Hope will make you broke. I think Tyler said that but I'm not sure. I am keeping it.
Cheers,
Mike The Skiing (and Slipping and Sliding) Trader
This will be a brief post because I have to go night skiing in a few minutes (life in Vancouver is awful, by the way).
As mentioned during January 13th's post, I went to bed last night dreaming of daily 2.5% returns. I was holding a position of 300 TSYS which had performed as expected in my first day of trading. I awoke in time to catch the opening of the markets - that's 6:30 am here on the West Coast.
Lo and behold, the markets opened sharply down. Macro-economic forces were reeking havoc on stocks indiscriminantly. TSYS fell below my support level and I hesitated. I thought, "Hey, it's not the stock, it's the market. My stock is still a good one." (ego!) So I held, expecting a bounce. The bounce came but by that time it was too late - I had already sold on panic (emotion!). I exited at 7.36. I was satisfied to see if fall even lower to 7.26 before reversing course.
Meanwhile, I violated another pledge of mine by deciding to try and take advantage of the inevitable bounce so many stocks were going to take during the day. I was suddenly going to day trade and make some of my money back. In retrospect, I guess things could have turned out worse.
Using various market scans I found a few stocks to watch. Shortly after 8 am local time (11 market time), I identified a stock (ELD.TO) that had broken its downward trend and reversed its direction. I bought 300 of these and rode this stock higher until it changed direction again and headed lower. I sold my 300 at a profit of $0.05 each, which actually lost me money once you factor in commission.
I then bought 300 FRPT @6.56 which also seemed to be breaking its downward trend and moving higher. Unfortunately this was a false start and I exited @6.52 for a loss of $12 US plus commissions.
Finally, I saw my old friend TSYS breaking its downward trend. I jumped on board at 7.44. I saw this stock rise as high as 7.52 before turning downward again. By this time I had admonished myself for becoming a day trader, recommitted myself to sticking to Swing Trading, re-established support for TSYS at 7.30 (the low of the inflection point on the 15 minute chart) and waited for the quiet close. This came at about 7.37. Somehow somebody snuck a 7.25 sale in there at the bell but I think that must have been an anomoly. I will see how TSYS reacts tomorrow. If it closes below 7.30 on the 15 minute chart, it is time to exit. Hopefully it can resume its pull back play and rise towards it's previous high of 8.78.
Some things I learned today:
- if the market is acting all negative and your stock is taking a beating pushing it below support, sell and wait out the craziness. Once the market has settled, look to re-enter a position in a stock meeting the criteria today for a pull back play strategy. It may even be your original stock but it does not have to be.
- your money doesn't need to be in a position. Let it sit if the market is doing crazy things.
- do not become a day trader just because. If you are going to trade a particular trading strategy, day, swing or position, follow the steps for developing a trading strategy and implement them in a structured and orderly way. Don't call an audible. The market isn't going anywhere and many other opportunities will come. Trading erratically is bad for business.
I am sure there are other lessons from today but they will need to be added in a future post. Today was a scorched earth day. I am lucky to really only be out my commissions on my later trades. Hopefully I do not get burned early tomorrow by that late trade on TSYS which pushed it below my support.
I will need to be back at my computer early tomorrow to see what happens.
In conclusion, I will further admonish myself for use of the word "hopefully" twice in my discussion of tomorrow's performance of TSYS. There is no room for hope in the market. Hope will make you broke. I think Tyler said that but I'm not sure. I am keeping it.
Cheers,
Mike The Skiing (and Slipping and Sliding) Trader
January 13th - Dipping My Toe In
Greetings and salutations (done in my best Christian Slater voice).
After markets closed on January 12th, I spent a considerable amount of time at the Stockscores website running market scans. Market scans are scans of the market done by the Stockscores server for stocks that meet certain criteria for different strategies. I have identified the following strategies as ones I can do when I buy long:
Day Trading
Superheroes
Hitting Into The Gap
Interday Pull Backs
Swing Trading
Hitting Floors
Overnight Holds
Pull Back Plays
Position Trading
Optomistic Consolidations
Abnormal Reversals
Sentiment Crossover
Bottom Fishing
Long-term Breakouts
Stockscores Simple
I avoided the Day Trading strategies since my proficiency must go up first. Many of the Position Trading strategies are for strong bull markets but I did review the stocks matching the Sentiment Crossover strategy. On Swing Trading strategies, since the market was closed when I did my scans, Overnight Holds was out - plus it is more of a bull market strategy which we are definitely not in at the moment - but I did review the Hitting Floors and Pull Back Plays candidates.
The procedure is to look at the candidates for each strategy that come up when you run the market scan and then identify those stocks out of those that meet all of the criteria for the strategy. The market scan only selects stocks which may be good candidates, by the way. The onus is still on us to review the charts to determine if all the strategy criteria exist.
By the way, I was planning on paper trading only for a week or so - Trade Freedom allows you to use a demo version of the trading platform to paper trade $1000. Ah well, the best laid plan's of mice and idiots. I fell in love with a stock during my market scan and had to jump in for real.
In running the Pull Back Plays market scan, I came across two stocks which were strong candidates for consideration.
The Pull Back Play strategy simply looks for stocks that are trending upwards that are bouncing off their trend lines.
Some clarification for you:
Up trends tend to follow a trend line, basically a line of best fit drawn across the pull backs of each move a stock makes. A move is just that, a move in one direction (up or down). Eventually the stock stops moving in that direction and reverses course. If it stops moving up, a peak is formed. If it stops moving down, a valley is formed. If a stock makes a series of moves in the same direction, a trend is formed. The line of best fit, aka the trend line, of an up trending stock is drawn across the lows of the pull backs - you might think of them as the valleys at the start of each individual move up.
The Pull Back Play looks for stocks that are experiencing pull backs to their trend lines, which they then bounce off of. This indicates the stock is likely to go higher.
So I identified two stocks, EGY and TSYS, which looked good to bounce up and had high reward to risk ratios. Risk is the distance the stock is from Support (downside) and reward is the distance the stock is from its likely Resistance (upside).
Support is a value of the stock below which you will know your prediction of the stock's performance has been incorrect.
Resistance is the value of the stock where you think it is likely to stop going up.
If you have at least twice as much distance to resistance as you do to support, then the trade is favourable.
By the way, a fundamental law of the Stockscores Approach is "Plan Your Losses". This means, know where Support is located and respect it. If the stock moves below support, sell and take your loss. By admitting defeat when proven wrong, you save yourself much larger possible losses when the stock moves lower. Not admitting defeat is one of the reasons I lost so much of my money during Lesson #2 (See My Trading Strategy for more info).
So, after identifying the two stocks mentioned, I had a closer look at them. I determined that they both had about a 4-1 reward to risk ratio (good stuff) but TSYS was set up better to go higher because it had pulled back for more days in a row before moving higher that day.
I was so sure of TSYS that I violated my paper trading pledge and vowed to get up early the next day to buy the stock for real. This I did on the morning of January 13th. In the first ten minutes of trading, I bought 300 TSYS @7.73 (Nasdaq stocks are in US funds). I proceeded to watch this stock all day on the 15 minute charts as it followed a nice, leisurely up trend. It closed at 7.93, up about 2.5% on the day.
I went to bed dreaming of sugar plums and daily 2.5% returns. Oh, Madam Market, how you do teach a lesson.
Blissfully yours,
Mike The Naive Trader
After markets closed on January 12th, I spent a considerable amount of time at the Stockscores website running market scans. Market scans are scans of the market done by the Stockscores server for stocks that meet certain criteria for different strategies. I have identified the following strategies as ones I can do when I buy long:
Day Trading
Superheroes
Hitting Into The Gap
Interday Pull Backs
Swing Trading
Hitting Floors
Overnight Holds
Pull Back Plays
Position Trading
Optomistic Consolidations
Abnormal Reversals
Sentiment Crossover
Bottom Fishing
Long-term Breakouts
Stockscores Simple
I avoided the Day Trading strategies since my proficiency must go up first. Many of the Position Trading strategies are for strong bull markets but I did review the stocks matching the Sentiment Crossover strategy. On Swing Trading strategies, since the market was closed when I did my scans, Overnight Holds was out - plus it is more of a bull market strategy which we are definitely not in at the moment - but I did review the Hitting Floors and Pull Back Plays candidates.
The procedure is to look at the candidates for each strategy that come up when you run the market scan and then identify those stocks out of those that meet all of the criteria for the strategy. The market scan only selects stocks which may be good candidates, by the way. The onus is still on us to review the charts to determine if all the strategy criteria exist.
By the way, I was planning on paper trading only for a week or so - Trade Freedom allows you to use a demo version of the trading platform to paper trade $1000. Ah well, the best laid plan's of mice and idiots. I fell in love with a stock during my market scan and had to jump in for real.
In running the Pull Back Plays market scan, I came across two stocks which were strong candidates for consideration.
The Pull Back Play strategy simply looks for stocks that are trending upwards that are bouncing off their trend lines.
Some clarification for you:
Up trends tend to follow a trend line, basically a line of best fit drawn across the pull backs of each move a stock makes. A move is just that, a move in one direction (up or down). Eventually the stock stops moving in that direction and reverses course. If it stops moving up, a peak is formed. If it stops moving down, a valley is formed. If a stock makes a series of moves in the same direction, a trend is formed. The line of best fit, aka the trend line, of an up trending stock is drawn across the lows of the pull backs - you might think of them as the valleys at the start of each individual move up.
The Pull Back Play looks for stocks that are experiencing pull backs to their trend lines, which they then bounce off of. This indicates the stock is likely to go higher.
So I identified two stocks, EGY and TSYS, which looked good to bounce up and had high reward to risk ratios. Risk is the distance the stock is from Support (downside) and reward is the distance the stock is from its likely Resistance (upside).
Support is a value of the stock below which you will know your prediction of the stock's performance has been incorrect.
Resistance is the value of the stock where you think it is likely to stop going up.
If you have at least twice as much distance to resistance as you do to support, then the trade is favourable.
By the way, a fundamental law of the Stockscores Approach is "Plan Your Losses". This means, know where Support is located and respect it. If the stock moves below support, sell and take your loss. By admitting defeat when proven wrong, you save yourself much larger possible losses when the stock moves lower. Not admitting defeat is one of the reasons I lost so much of my money during Lesson #2 (See My Trading Strategy for more info).
So, after identifying the two stocks mentioned, I had a closer look at them. I determined that they both had about a 4-1 reward to risk ratio (good stuff) but TSYS was set up better to go higher because it had pulled back for more days in a row before moving higher that day.
I was so sure of TSYS that I violated my paper trading pledge and vowed to get up early the next day to buy the stock for real. This I did on the morning of January 13th. In the first ten minutes of trading, I bought 300 TSYS @7.73 (Nasdaq stocks are in US funds). I proceeded to watch this stock all day on the 15 minute charts as it followed a nice, leisurely up trend. It closed at 7.93, up about 2.5% on the day.
I went to bed dreaming of sugar plums and daily 2.5% returns. Oh, Madam Market, how you do teach a lesson.
Blissfully yours,
Mike The Naive Trader
My trading strategy
Hello again, FF&UP.
Before we jump into my journal on specific trading activities, I thought it might be good to detail my trading history and philosophy. Again, since I don't expect many readers for this blog, this is just as much to clarify my mind as it is to inform you.
As I mentioned in my introductory post, I purchased a stock trading course from Stockscores (http://www.stockscores.com/) a couple of years ago. I came across this course when I was selling online advertising for The Globe and Mail, Canada's #1 National Newspaper. (To all you National Post readers, my Dad included, let's be honest...the Post is a rag. It just uses smaller words so its redneck readers are more comfortable with its propaganda.)
(I love senseless rivalries by the way, don't you? What better means to throw out hateful yet harmless insults freely? While we're at it, Leafs, Flames and Oilers suck dangling horse parts! It looks like this will not be a family friendly blog, after all.)
Anyhoo, the founder of Stockscores, Tyler Bollhorn, wanted to buy advertising and I was his sales rep. I went and saw him speak at an introductory course and bought into his trading philosophy because it seemed to solve my problems from Lesson #1 (see below). So much so that I plopped a bunch of my sales commission that quarter (including all of the proceeds earned from the Stockscores advertising) down on the Pro course. You're welcome, Tyler.
With the Pro course came a big book of theory and instruction plus one year's access to the Stockscores website and one year's subscription to the daily newsletter sent by Tyler himself - I have since re-subscribed to both of these. I promptly threw $5000 into a BMO account and tried my hand at trading. I kind of forgot to follow all of Tyler's advice and saw that $5000 dwindle down pretty near to zero. We'll call that Lesson #2.
Lesson #1, for the record, came during the tech boom many years ago. Man that was exciting. All that trading of companies I had never heard of for no discernible reason. I remember making a 40% return on one trade in one day. Onvia.com. I will never forget that feeling of exhilaration. It had me hooked. So hooked I watched all of my money disappear chasing the dragon. I like to say I saw more Chapter 11s than the Bible. As far as I know I wrote that little joke. I'm keeping it.
By the way, the lesson learned was "don't trade indiscriminately, without a plan or knowledge. It really is just like gambling and, just like in Vegas, you are going to lose."
So Lesson #1 is firmly in my data bank. What was the lesson from Lesson #2? "If you have a strategy from an expert, stick to it!" The main components of Tyler's teachings that I ignored were:
1. Control Your Emotions,
2. Plan Your Losses,
3. Don't Enter a Trade Unless it Meets all Criteria for the Strategy.
Anyway, those are the things I remember doing wrong although I am sure there were many more.
So here I am, blessed with free time to study my course material again and watch the market more closely than when I was stuck in a job. Somehow I found $3000 to begin Mike's Stockscores Trading Journey 2.0.
Unlike my first Stockscores Trading Journey when I traded through BMO Investorline, this time I am trading through Trade Freedom. This is the trading platform provided through Scotiabank and its chief advantage over BMO is that it has a good trading platform (TradeFreedomEdge) with real-time quotes and charts. Since charts are the most important component of the Stockscores method, this really is an essential tool. For whatever reason I could not find one through BMO (sorry, Eric.).
So, $3000 in a Trade Freedom account, the charting program loaded on my laptop and a recent review of key Stockscores course materials (both from the instruction manual and from the online instructional videos at the website). I am off and running!
Now this may seem like an awful time to get into the market and, you know, it just might be. But from my perspective, this is a great time to jump in. There is a lot of volatility in the market and if the indices are any indication (what a redundant redundancy!), we're nearing or have reached the bottom.
The Stockscores philosophy, by the way, focuses upon trading on technical indicators rather than on company fundamentals. Let's take Company X, for example. It makes and sells a product that everybody uses and will continue to use for the foreseeable future. A trader on company fundamentals such as Warren Buffett might see this company as attractive. They might buy the stock and hold it for several years. We have to look at fundamental trading as trading done because a company itself looks good and you think its stock is likely to rise.
Technical trading on the other hand uses the movement of the market to identify stocks worth buying. Trends, indicators, etc. It doesn't matter what the company does, it simply matters what the stock is doing and how the market views it.
Stockscores is focused on technical trading and, therefore, so am I. If you happen to read this blog and say, "Mike, you should buy Company Y because it has a great product that is sure to be in demand in the future." I will say, "thanks but let me look at the chart."
The chart is our guide. The chart tells us if the stock is likely to move higher or lower. Using rules grounded in observation, we can anticipate the movement of many stocks based upon familiar chart patterns. The Stockscores approach helps us identify which stocks are following predictable and probable patterns and then we buy or sell based upon these probabilities.
There are many different predictable chart patterns covered in the Stockscores course. The course helps you identify stocks to watch and then observe signals on when to enter and exit. Follow the rules and profit. Really, it is that simple.
But as Tyler says (and so many other people say it, too), "It's simple but it ain't easy." It ain't easy because of our emotion and our ego. Our emotion makes us do stupid things out of fear or greed and our ego tells us we know better than the rules, so we do stupid things. See Lesson #2 above.
There are a number of different strategies in the Stockscores Approach - strategies that fit up markets, down markets, volatile markets, etc. In addition, there are strategies for the different time frames you might want to trade - position (longer term), swing (medium term) and day (short term) trading. This depends mostly on your ability to watch the market and I would postulate that the upside is higher with shorter time frames. We'll see, I guess.
For now I am mostly going to focus on Swing Trading Strategies, strategies that include hold periods of 1-7 days from buy to sell. In time I plan to adopt some Day Trading Strategies when I get more proficient at the whole thing.
Just in case you are wondering, I am limiting myself to Buying Long for now - that is, buying a stock expectant that it will go up. I might get into Short Selling and Options Trading later but let's follow Bob's lead and take baby steps to the back of the bus for now.
Okay, let's move on to a review of my trading.
Ciao for now!
Mike The Happy Trader
Before we jump into my journal on specific trading activities, I thought it might be good to detail my trading history and philosophy. Again, since I don't expect many readers for this blog, this is just as much to clarify my mind as it is to inform you.
As I mentioned in my introductory post, I purchased a stock trading course from Stockscores (http://www.stockscores.com/) a couple of years ago. I came across this course when I was selling online advertising for The Globe and Mail, Canada's #1 National Newspaper. (To all you National Post readers, my Dad included, let's be honest...the Post is a rag. It just uses smaller words so its redneck readers are more comfortable with its propaganda.)
(I love senseless rivalries by the way, don't you? What better means to throw out hateful yet harmless insults freely? While we're at it, Leafs, Flames and Oilers suck dangling horse parts! It looks like this will not be a family friendly blog, after all.)
Anyhoo, the founder of Stockscores, Tyler Bollhorn, wanted to buy advertising and I was his sales rep. I went and saw him speak at an introductory course and bought into his trading philosophy because it seemed to solve my problems from Lesson #1 (see below). So much so that I plopped a bunch of my sales commission that quarter (including all of the proceeds earned from the Stockscores advertising) down on the Pro course. You're welcome, Tyler.
With the Pro course came a big book of theory and instruction plus one year's access to the Stockscores website and one year's subscription to the daily newsletter sent by Tyler himself - I have since re-subscribed to both of these. I promptly threw $5000 into a BMO account and tried my hand at trading. I kind of forgot to follow all of Tyler's advice and saw that $5000 dwindle down pretty near to zero. We'll call that Lesson #2.
Lesson #1, for the record, came during the tech boom many years ago. Man that was exciting. All that trading of companies I had never heard of for no discernible reason. I remember making a 40% return on one trade in one day. Onvia.com. I will never forget that feeling of exhilaration. It had me hooked. So hooked I watched all of my money disappear chasing the dragon. I like to say I saw more Chapter 11s than the Bible. As far as I know I wrote that little joke. I'm keeping it.
By the way, the lesson learned was "don't trade indiscriminately, without a plan or knowledge. It really is just like gambling and, just like in Vegas, you are going to lose."
So Lesson #1 is firmly in my data bank. What was the lesson from Lesson #2? "If you have a strategy from an expert, stick to it!" The main components of Tyler's teachings that I ignored were:
1. Control Your Emotions,
2. Plan Your Losses,
3. Don't Enter a Trade Unless it Meets all Criteria for the Strategy.
Anyway, those are the things I remember doing wrong although I am sure there were many more.
So here I am, blessed with free time to study my course material again and watch the market more closely than when I was stuck in a job. Somehow I found $3000 to begin Mike's Stockscores Trading Journey 2.0.
Unlike my first Stockscores Trading Journey when I traded through BMO Investorline, this time I am trading through Trade Freedom. This is the trading platform provided through Scotiabank and its chief advantage over BMO is that it has a good trading platform (TradeFreedomEdge) with real-time quotes and charts. Since charts are the most important component of the Stockscores method, this really is an essential tool. For whatever reason I could not find one through BMO (sorry, Eric.).
So, $3000 in a Trade Freedom account, the charting program loaded on my laptop and a recent review of key Stockscores course materials (both from the instruction manual and from the online instructional videos at the website). I am off and running!
Now this may seem like an awful time to get into the market and, you know, it just might be. But from my perspective, this is a great time to jump in. There is a lot of volatility in the market and if the indices are any indication (what a redundant redundancy!), we're nearing or have reached the bottom.
The Stockscores philosophy, by the way, focuses upon trading on technical indicators rather than on company fundamentals. Let's take Company X, for example. It makes and sells a product that everybody uses and will continue to use for the foreseeable future. A trader on company fundamentals such as Warren Buffett might see this company as attractive. They might buy the stock and hold it for several years. We have to look at fundamental trading as trading done because a company itself looks good and you think its stock is likely to rise.
Technical trading on the other hand uses the movement of the market to identify stocks worth buying. Trends, indicators, etc. It doesn't matter what the company does, it simply matters what the stock is doing and how the market views it.
Stockscores is focused on technical trading and, therefore, so am I. If you happen to read this blog and say, "Mike, you should buy Company Y because it has a great product that is sure to be in demand in the future." I will say, "thanks but let me look at the chart."
The chart is our guide. The chart tells us if the stock is likely to move higher or lower. Using rules grounded in observation, we can anticipate the movement of many stocks based upon familiar chart patterns. The Stockscores approach helps us identify which stocks are following predictable and probable patterns and then we buy or sell based upon these probabilities.
There are many different predictable chart patterns covered in the Stockscores course. The course helps you identify stocks to watch and then observe signals on when to enter and exit. Follow the rules and profit. Really, it is that simple.
But as Tyler says (and so many other people say it, too), "It's simple but it ain't easy." It ain't easy because of our emotion and our ego. Our emotion makes us do stupid things out of fear or greed and our ego tells us we know better than the rules, so we do stupid things. See Lesson #2 above.
There are a number of different strategies in the Stockscores Approach - strategies that fit up markets, down markets, volatile markets, etc. In addition, there are strategies for the different time frames you might want to trade - position (longer term), swing (medium term) and day (short term) trading. This depends mostly on your ability to watch the market and I would postulate that the upside is higher with shorter time frames. We'll see, I guess.
For now I am mostly going to focus on Swing Trading Strategies, strategies that include hold periods of 1-7 days from buy to sell. In time I plan to adopt some Day Trading Strategies when I get more proficient at the whole thing.
Just in case you are wondering, I am limiting myself to Buying Long for now - that is, buying a stock expectant that it will go up. I might get into Short Selling and Options Trading later but let's follow Bob's lead and take baby steps to the back of the bus for now.
Okay, let's move on to a review of my trading.
Ciao for now!
Mike The Happy Trader
Introduction to the blog
Howdy friends, family and unknown passersby (How did you find me, anyway?).
Welcome to the "Mike's Stock Journey" blog, where I chronicle my adventure into the world of stock trading, a hobby I have hoped to take up for several years. Before I begin the chronicle of my actual stock trading, I wanted to share with you my background of how I ended up beginning this journey now. We'll get into stock trading in the next post.
Back in October I lost my job as an Inside Sales Manager. My boss claimed it was due to the "troubling economic times" but I believe there was more to it than that. I think I never quite fit in as he had expected me to when I had been hired 16 months earlier and we never became a cohesive boss-subordinate pair.
In my post-dismissal reflection period, I realized that maybe the subordinate role is not something I do very well. Regardless of the reasons for the lack of cohesion between us, when given an excuse to bid me adieu, he exercised his right as the dominant member of the two and cut me loose.
Suddenly income-free in a panicking business climate, I weighed the options of finding another full-time job (an endeavour I admittedly undertook somewhat half-heartedly). This "security" that comes with a full-time job, security my father and others tout so highly, turns out not to be so secure after all. One day I had a secure job and the next I did not. Committed to never again relying on a "job" for my security, I began my quest for financial freedom - freedom from the reliance on others for the continued delivery of my personal revenue.
With the help of my friend, Darren, I realized there are two distinct reasons for the need for "work" - what are you going to do for money and what are you going to do for your purpose? Often people attempt to combine the two, expecting to be fulfilled in their job, thus satisfying both problems simultaneously. For me, I have simply not found this to be the case.
I find that going to work is a stressful chore. I feel the constant pressure from the need to earn money in that job and I fear losing that job. I feel it during the commute ("I can't be late or I'll get fired!"), I feel it in my interactions ("I must be polite and submissive to my boss because he is the one with the power to fire me."), I feel it on days I don't want to work ("I have to go in or else they will fire me.") and I feel it on payday ("Phew, thank god I stuck around long enough to get this measly pay cheque!"). Any fulfillment I get from my job is fleeting and is overwhelmed by the stress of needing the job. No, I have learned that my fulfillment must likely come from outside the means through which I earn enough money to survive.
I don't want to sound like a pouting baby, a Peter Pan-type who doesn't want to grow up and do work. On the contrary, I intend to grab hold of my own destiny and stop playing the game the way they tell us to play it. Pardon my German, but screw that! I'm going to be a self-sufficient adult in a volatile and brutal world. No more will my security be reliant on an all-powerful boss who has the power to pull the carpet out from under me.
So, how in the world am I going to do that? What makes me think it can be done? If it can be done, why doesn't everyone do it? Good questions.
We've all heard the phrase, "people fear change." I believe there is a significant amount of momentum to society and that most people do what the herd does or what those before us did. Our parents did it the old fashioned way - go get a job, keep that job, retire. This story has been amended in recent times to go get a job, leave job, get another job, repeat as needed, retire. The crowd is doing it, so it must be the correct method to live life and retire, right? I simply don't buy that. I think there are a number of people who realise the old way doesn't pay. Entrepreneurs and the new rich.
Entrepreneurs are those people who set out to start and grow businesses. The growth allows them to build something which they can sell for more than they put in so they can retire. They tend to reach retirement faster than the average Joe but there is still a slight problem with this strategy (besides the super long hours and stress). I will discuss it shortly.
The New Rich, on the other hand, are those folks that build up passive or nearly passive revenue streams until they are financially free. Robert Kiyosaki (Rich Dad's Cashflow Quadrant) and Timothy Ferriss (The Four Hour Workweek) are advocates of this strategy.
I love the ideas put forth to become one of the New Rich. I want to build passive or nearly passive income streams that will pay me enough money monthly that all of my expenses are met. If I make more than my expenses, I will re-invest my surplus in additional passive income vehicles. Omitting some important details on the steps to be taken (please read the books), I will soon have perpetual sources of passive income that continue to accumulate regardless of whether I do any work or not.
If my passive income exceeds my monthly expenses, I am wealthy. I can do whatever I want with my time. I am free, financially and time-wise, too. This is the strategy of the New Rich. Many people are putting this strategy into play it successfully but most people aren't even aware the strategy exists.
The retirement plan of the New Rich is advantageous to the normal retirement plan of the Average Joe and even of the entrepreneur. For the latter two groups, the idea is to build up a retirement fund, an RSP, 401k or even an investment account funded by the sale of a business. The hope is this fund is large enough that chipping away bits of it every year of retirement will never result in its complete evaporation. The fund will need to be pretty big to last as long as you plan on living and, with the way the stock market tanks so regularly, it also needs to be large enough to survive down cycles. Eventually it will shrink away and you will have to die because you have no money left. Too bad.
Passive income streams on the other hand come from assets that will continue to deliver you monthly income without depletion of the core asset. Therefore they will continue until such time as you die after which they will pass on to those celebrating your memory (and good money skills). True, retirement funds also deliver passive income streams but the core fund will need to be extremely large to support your current standard of living for the several years you hope to live beyond retirement, won't it. Just do the math on the size of fund (paying a generous 10% annually) must be to pay the thousands of dollars you will need each month to maintain your standard of living through retirement. Short answer: big.
So, how am I going to build passive income streams? Well, I am firstly going to start a web-based business. Why a web-based business? Because a web-based business can operate independent of whether I am in front of my computer or not. Once set up, a web-based business will continue doing its thing without much involvement from me whatsoever. This is all Four Hour Work Week stuff, so please go read it.
In time I may develop a number of web-based businesses, thus protecting me from downturns in one specific area and providing multiple streams of passive income. Soon the hope is that this income stream will exceed my modest monthly expenses and I can invest in more sophisticated passive income streams - real estate, emerging businesses, etc. This is all Cashflow Quadrant stuff, so please go read it.
Viola! I'm wealthy!
Sounds easy, doesn't it? I find it scary, to tell the truth. But I believe in the strategy wholeheartedly and intend to put it into action. I may even start a blog discussing the steps I am taking and the results I am seeing. Stay tuned.
What, you might be asking, does this have to do with stock trading? Nothing too directly but everything from a lifestyle perspective.
Back when I was glued to a desk with a nine-to-fiver, trading stocks was not something I could devote much time to, even though I wanted to and believed I could do so successfully. You see, several years ago I invested in a stock trading course through Stockscores (http://www.stockscores.com/). This trading course focuses specifically on technical trading, that is, trading "trends in the market" not "fundamentals such as whether a company is good or not". This course was pretty expensive and it has pretty much been burning a hole on my shelf since.
Now, with my time freed up (passive income stream pursuit is not as tiem consuming as you might think), I can begin putting the training of this course into play. I can be home during trading hours (6:30 am - 1 pm PST), following the market and making trades as required.
There is also the bonus of earning some extra income if I get successful at the strategies taught in the Stockscores course. That extra income can be kept in the market or liberated from the market as I see fit to purchase even more passive income streams.
But mostly I want to trade stocks because I find the whole thing challenging and fun. When I think about the number of people out there trading stocks, I get excited by the game. I want to beat my fellow traders by being more disciplined, overcoming my emotions and following proven strategies diligently.
This blog will serve as my journal, my opportunity to explain the moves I have made or am considering making. By spelling it out I know I will be more honest and will stick to my rules. If I am successful, then this blog can also serve as a learning tool for you - my friends, my family and you unknown passersby. Now that you are here and you know so much about me, won't you stay?
Until next time.
Mike The Happy Trader
Welcome to the "Mike's Stock Journey" blog, where I chronicle my adventure into the world of stock trading, a hobby I have hoped to take up for several years. Before I begin the chronicle of my actual stock trading, I wanted to share with you my background of how I ended up beginning this journey now. We'll get into stock trading in the next post.
Back in October I lost my job as an Inside Sales Manager. My boss claimed it was due to the "troubling economic times" but I believe there was more to it than that. I think I never quite fit in as he had expected me to when I had been hired 16 months earlier and we never became a cohesive boss-subordinate pair.
In my post-dismissal reflection period, I realized that maybe the subordinate role is not something I do very well. Regardless of the reasons for the lack of cohesion between us, when given an excuse to bid me adieu, he exercised his right as the dominant member of the two and cut me loose.
Suddenly income-free in a panicking business climate, I weighed the options of finding another full-time job (an endeavour I admittedly undertook somewhat half-heartedly). This "security" that comes with a full-time job, security my father and others tout so highly, turns out not to be so secure after all. One day I had a secure job and the next I did not. Committed to never again relying on a "job" for my security, I began my quest for financial freedom - freedom from the reliance on others for the continued delivery of my personal revenue.
With the help of my friend, Darren, I realized there are two distinct reasons for the need for "work" - what are you going to do for money and what are you going to do for your purpose? Often people attempt to combine the two, expecting to be fulfilled in their job, thus satisfying both problems simultaneously. For me, I have simply not found this to be the case.
I find that going to work is a stressful chore. I feel the constant pressure from the need to earn money in that job and I fear losing that job. I feel it during the commute ("I can't be late or I'll get fired!"), I feel it in my interactions ("I must be polite and submissive to my boss because he is the one with the power to fire me."), I feel it on days I don't want to work ("I have to go in or else they will fire me.") and I feel it on payday ("Phew, thank god I stuck around long enough to get this measly pay cheque!"). Any fulfillment I get from my job is fleeting and is overwhelmed by the stress of needing the job. No, I have learned that my fulfillment must likely come from outside the means through which I earn enough money to survive.
I don't want to sound like a pouting baby, a Peter Pan-type who doesn't want to grow up and do work. On the contrary, I intend to grab hold of my own destiny and stop playing the game the way they tell us to play it. Pardon my German, but screw that! I'm going to be a self-sufficient adult in a volatile and brutal world. No more will my security be reliant on an all-powerful boss who has the power to pull the carpet out from under me.
So, how in the world am I going to do that? What makes me think it can be done? If it can be done, why doesn't everyone do it? Good questions.
We've all heard the phrase, "people fear change." I believe there is a significant amount of momentum to society and that most people do what the herd does or what those before us did. Our parents did it the old fashioned way - go get a job, keep that job, retire. This story has been amended in recent times to go get a job, leave job, get another job, repeat as needed, retire. The crowd is doing it, so it must be the correct method to live life and retire, right? I simply don't buy that. I think there are a number of people who realise the old way doesn't pay. Entrepreneurs and the new rich.
Entrepreneurs are those people who set out to start and grow businesses. The growth allows them to build something which they can sell for more than they put in so they can retire. They tend to reach retirement faster than the average Joe but there is still a slight problem with this strategy (besides the super long hours and stress). I will discuss it shortly.
The New Rich, on the other hand, are those folks that build up passive or nearly passive revenue streams until they are financially free. Robert Kiyosaki (Rich Dad's Cashflow Quadrant) and Timothy Ferriss (The Four Hour Workweek) are advocates of this strategy.
I love the ideas put forth to become one of the New Rich. I want to build passive or nearly passive income streams that will pay me enough money monthly that all of my expenses are met. If I make more than my expenses, I will re-invest my surplus in additional passive income vehicles. Omitting some important details on the steps to be taken (please read the books), I will soon have perpetual sources of passive income that continue to accumulate regardless of whether I do any work or not.
If my passive income exceeds my monthly expenses, I am wealthy. I can do whatever I want with my time. I am free, financially and time-wise, too. This is the strategy of the New Rich. Many people are putting this strategy into play it successfully but most people aren't even aware the strategy exists.
The retirement plan of the New Rich is advantageous to the normal retirement plan of the Average Joe and even of the entrepreneur. For the latter two groups, the idea is to build up a retirement fund, an RSP, 401k or even an investment account funded by the sale of a business. The hope is this fund is large enough that chipping away bits of it every year of retirement will never result in its complete evaporation. The fund will need to be pretty big to last as long as you plan on living and, with the way the stock market tanks so regularly, it also needs to be large enough to survive down cycles. Eventually it will shrink away and you will have to die because you have no money left. Too bad.
Passive income streams on the other hand come from assets that will continue to deliver you monthly income without depletion of the core asset. Therefore they will continue until such time as you die after which they will pass on to those celebrating your memory (and good money skills). True, retirement funds also deliver passive income streams but the core fund will need to be extremely large to support your current standard of living for the several years you hope to live beyond retirement, won't it. Just do the math on the size of fund (paying a generous 10% annually) must be to pay the thousands of dollars you will need each month to maintain your standard of living through retirement. Short answer: big.
So, how am I going to build passive income streams? Well, I am firstly going to start a web-based business. Why a web-based business? Because a web-based business can operate independent of whether I am in front of my computer or not. Once set up, a web-based business will continue doing its thing without much involvement from me whatsoever. This is all Four Hour Work Week stuff, so please go read it.
In time I may develop a number of web-based businesses, thus protecting me from downturns in one specific area and providing multiple streams of passive income. Soon the hope is that this income stream will exceed my modest monthly expenses and I can invest in more sophisticated passive income streams - real estate, emerging businesses, etc. This is all Cashflow Quadrant stuff, so please go read it.
Viola! I'm wealthy!
Sounds easy, doesn't it? I find it scary, to tell the truth. But I believe in the strategy wholeheartedly and intend to put it into action. I may even start a blog discussing the steps I am taking and the results I am seeing. Stay tuned.
What, you might be asking, does this have to do with stock trading? Nothing too directly but everything from a lifestyle perspective.
Back when I was glued to a desk with a nine-to-fiver, trading stocks was not something I could devote much time to, even though I wanted to and believed I could do so successfully. You see, several years ago I invested in a stock trading course through Stockscores (http://www.stockscores.com/). This trading course focuses specifically on technical trading, that is, trading "trends in the market" not "fundamentals such as whether a company is good or not". This course was pretty expensive and it has pretty much been burning a hole on my shelf since.
Now, with my time freed up (passive income stream pursuit is not as tiem consuming as you might think), I can begin putting the training of this course into play. I can be home during trading hours (6:30 am - 1 pm PST), following the market and making trades as required.
There is also the bonus of earning some extra income if I get successful at the strategies taught in the Stockscores course. That extra income can be kept in the market or liberated from the market as I see fit to purchase even more passive income streams.
But mostly I want to trade stocks because I find the whole thing challenging and fun. When I think about the number of people out there trading stocks, I get excited by the game. I want to beat my fellow traders by being more disciplined, overcoming my emotions and following proven strategies diligently.
This blog will serve as my journal, my opportunity to explain the moves I have made or am considering making. By spelling it out I know I will be more honest and will stick to my rules. If I am successful, then this blog can also serve as a learning tool for you - my friends, my family and you unknown passersby. Now that you are here and you know so much about me, won't you stay?
Until next time.
Mike The Happy Trader
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