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A Winning Trading Strategy

In the past few weeks I have looked at my trades for the past year and realized I don’t have a winning trading strategy.  I have been making a lot of trades with varied amounts of success.  The trades put me in the hole quite a bit and I knew I needed to change something.  I signed up for one of Timothy Sykes’ education courses and hit the books studying!  Follow the links to get more details about those items.  Here are some of my early trades as my education starts to show.

Losing Trades = Learning Opportunities

On 8/29 I watched as GOL, a Brazilian Airline, was on the upswing after bouncing off support around $5.  As the stock pushed higher, I decided to buy in order to capture the momentum.  I bought 911 shares for $5.55 each, total cost $4,997.23.  The price seemed to stall but I stayed optimistic that it would stay above $5 and soon make a move toward $7 or $8 as it had earlier in the year.  On 9/4, I saw the price drop toward $5 and decided to buy more in order to lower my average cost.  I bought 1956 additional shares for $5.12 each, total cost $10,014.00.  My total position was 2,867 shares with $15,011.23 invested at an average of $5.24 per share.

That same day the $5 support didn’t hold and I sold all 2867 shares for $4.98 each.  In hindsight I could have seen this coming.  See the graph below, notice the obvious downtrend?  Despite the $5 support level, when the trend is down it will eventually come to a point, quite literally.   When it reaches this point, it will either reverse direction into an uptrend or fall through support.  The thing to remember is no one knows what it will do.

So the only safe move is no move.  Sure, you could guess and maybe you’d be right, but maybe not.  Either way, it’s a gamble, and to me it’s not worth taking.  This lesson resulted in a loss of $737.66, about 5.3%.  In perspective, I paid $1900 for my educational material.  I now have a firm understanding of what can happen on a downtrending chart.

Ford: Downtrend with Good News

Ford (F) had a similar graph when compared to GOL.  It was downtrending in a similar manner but was slightly different.  They released earnings and the initial reaction was positive.  I believed it could reverse its trend.  On 9/4, I bought 1571 shares for $9.54 each, total cost was $15,007.74.  Turned out I was wrong, the trend reversal didn’t hold.  I cut my losses quickly when the price dropped to $9.35 the next day.  This resulted in a loss of $305.53, about 2%.  Despite being wrong I think this was still a good trade.  They had positive news and were bouncing off a support level.  But it didn’t go the way I thought so there was no reason to stay with it and hope I turned a profit in a few days or weeks.  Hope is not a strategy; I am committed to playing my strategy.

ALERT!

On the morning of 9/5, I received an alert from the education program I bought.  WATT was flying upward and Tim Sykes himself had bought in.  In pre-market trading, I bought 361 shares for $13.94 each, total cost $5,036.97.  I didn’t have any other reason other than the alert to buy this stock.  I did take a smaller position, around $5K instead of my usual $10K – $20K, to limit my risk.  As 9:30 approached, the price jumped all over the $13-$14 range but never went above $14.  Tim had sold out only a few minutes after buying in but I held until the market opened.  After a few minutes the price continued on a downward spiral and I sold when the price reached $13.  Total loss was $349.03, about 6.9%.  The lesson I learned here is not to go blindly into any stock even if it comes from an expert alert.  You need a plan to make a trade, I had no plan.  $350 to learn that lesson.

The WINS!

OK so I’m down $1,392 after making those trades and learning those lessons.  Not everything went wrong, after enduring those losses, two of them completely avoidable, I hit a stride and started making money again.

NLST is a penny stock that had been moving quite a bit this week.  Twitter and chatrooms were buzzing and there was plenty of volume to support a quick trade.  On 9/7 the stock opened at $0.36 after closing at $0.16 the day before.  That is more than double in price!  It quickly moved up to $0.40 before going back to $0.30 in the first 10 minutes of trading.  After touching $0.30 it hovered around $0.31 until it began an upward move.  I bought 35,000 shares for $0.315 each, total cost was $11,029.95.  The chart moved up slowly and seemed to stall at $0.35, when the price retreated I sold.  I sold all my shares for $0.345 each, total sale $12,065.72, a profit of $1,035.77, about 9.4%!  All this happened in the first 20 minutes of the market opening.  I had ideal conditions, no one was bothering me at work.  After this trade I went on with the rest of my day!

This trade was on my watchlist of 6 stocks in the morning pre-market.  As 9am rolled around I checked again and 4 of those stocks weren’t acting like I wanted.  As 9:30 hit, NLST was moving quickly so I ignored the other stock I was watching.  Had this pattern not emerged I would not have traded.  Here is the chart I was looking at as the market opened:

It doesn’t matter that some people held overnight and doubled their money.  It doesn’t matter that the stock now trades at $0.38, so I “could” have made even more.  What matters is that I saw a pattern and took some profits from that pattern.  Don’t get greedy and don’t get scared.  Keep emotions on the sideline and take predictable profits when they are available.  This is the winning strategy of a day trader.

More Victories

With a similar mindset as the trade above, I typically select a few stocks to watch between 7am and 8am, before the market opens.  As it gets closer to 9am, I check on all those stocks again for a strong open.  At 9am I typically cross off any stocks that are not acting favorably.  As 9:30 arrives, the markets open and this is when I look for patterns to develop; the one above held support at $0.30 and began moving up.  I don’t try to predict the move, I wait for the move to show itself and then capture a portion of it.  If the stock moves against me I get out immediately.  No “hoping” because hope is not a strategy.  If you are hoping for a stock to go in your favor, you are better off buying a lottery ticket and hoping you win.

9/11 CVSI was just one of these stocks on my pre-market watchlist, and survived multiple list reductions to be the sole survivor.  I bought 3,000 shares for $5.25 each, total cost $15,754.95.  Within a few minutes I sold them for $5.37 each, total sale was $16,104.48.  This was just another disciplined trade.  Total profit was $349.53, about 2.2%.

The Gap-Up Strategy

Another strategy I am using is the Gap-up strategy.  This is a simple move that is relatively safe.  All you do is look for a stock that made a large move, 5% or more, and see if it closes near or at the high of the day.  The next day, after a strong close, you will typically see a strong opening.  Even when you don’t get a strong open, you will usually have a chance to get back out even.

9/12 No trades in the morning but as 4pm neared I bought 50,000 shares of SGMD for $0.1175 each, total cost $5,879.95.  I was attempting to use the gap-up strategy.  The next day it worked!  The stock opened at $0.1190 and began inching upward.  I got distracted in another trade and missed an opportunity to sell above $0.13.  I did manage to sell at $0.1227 per share, total sale $6,126.52.  Total profit $246.57, about 4.2% a solid profit!

The trade that was distracting me was NIO.  Today I worked from home as hurricane Florence moved toward North Carolina, so I had plenty of time to prepare a watchlist and narrow it down as the market open came close.  I was still holding the SGMD I discussed above so I had to pay attention to that, too.  RIO is an IPO (Initial Public Offering) that claims to be challenging Tesla (TSLA).  The day before it made gains but failed to break through $7.  Today it moved through and rocketed past $7.  I made a typo on my first order and ended up buying higher than I hoped at $7.20.  I bought 1,000 shares for a total of $7,204.95.  A few minutes later I sold as it was rising and distractions from house guests increased.  I sold for $7.49 per share for a total sale of $7,484.83.  A profit of $246.57, about 3.9%!  I made over $500 before 10am!

Final Thoughts and Notes

From all the trades above I netted a profit of $519.53.  Including all my trades since beginning the training course, my profits are $1,558.60!  I have nearly recouped the entire $1,900 cost of the course.

Contributions of $450 in side hustle income.

Contributions from my paycheck totaled $200, $100 each week.

I am finally beginning to feel more comfortable trading!  I am confident in my plans and the profits are proof of concept.  There is still much more studying to do.  Please follow my blog to learn with me and get inspired yourself!

Check out all my trades here at Profit.ly, the social media for traders!  You can keep your account private to create an easy to use trading journal.

Follow me on Twitter for live trades!

Thanks for reading and happy trading!

Facebook: the Biggest Loss EVER! plus BITCOIN: It’s Your Move

In the past 2 weeks, I have become a little more active in my trading, Bitcoin is on the rebound and Facebook recorded the biggest single-day loss in the history of the stock market.  Bitcoin it’s your move. This may be the last chance to get in cheap(ish).  Facebook and FAANG decline, what you should make of it.

Bitcoin’s $6,000 Bounce

Bitcoin, as you can see on the graph to the left, has been a bit of a roller coaster in the past 6 months.  With its all-time high of over $19,000 from December seeming like a distant memory no one was quite sure how far the price would fall.  In June the price dropped just below $6,000 and quickly jumped back up above it.  After getting back over $6,000 it seemed to stall for several weeks, which led to much speculation about the end of Cryptocurrencies.

Nothing could be further from the truth, Bitcoin is not dead and likely has a long future ahead.  Many institutional investors have been flocking in since the beginning of the year.  Some governments around the world are holding large quantities and even Goldman Sachs, the bank with the closest ties to the US government, has invested heavily in setting up their own Bitcoin exchange.  Goldman is one of the few large, well recognized, well-established banks that is welcoming the world of cryptocurrencies.  In my opinion, they see the writing on the wall and don’t want to get left behind.  If you can’t beat them, join them!

At this writing, the price has rebounded above $8,000, essentially bouncing off of the $6,000 support level.  The coming weeks may see a strong continuation, $10,000 will provide a challenge; if it can break through that, the sky is the limit.

Bitcoin It’s Your Move

This is quite possibly the last time that Bitcoin will trade this low.  A year ago today Bitcoin traded at $2,800 and the early investors celebrated with lobster and champagne.  While Bitcoin is a long way from its all-time high above $19,000, it is currently trading at an attractive level for those wanting to get started.

I invest in Bitcoin with Coinbase, follow this link to start your own account.  We will both receive $10 worth of Bitcoin if you purchase at least $100.  While I believe the price of Bitcoin will grow exponentially in the next few years, there are no guarantees.  Invest only what you can afford to lose.

FAANG and the Fall of Facebook

FAANG is an acronym for the big tech stocks that seem to have limitless growth potential.  Facebook (FB), Apple (AAPL), Amazon (AMZN), Nexflix (NFLX), and Google’s parent company Alphabet (GOOG, GOOGL).  These stocks have been exploding, gaining between 50% and 150% each year since the great recession ended in 2010.  The bigger the gains the bigger the falls.

NFLX was trading near its all-time high of $420 per share when it’s earnings report came out, the share price has dropped to $340, a 20% decline in about 1 week.  This was a result of slowing subscriber growth.

FB was trading at $217 per share but when it reported a loss of users, it dropped to $175 in a single day.  This loss equated to more than $100 billion, the largest single-day loss in value of any stock in the history of the stock market.

AMZN reported strong earnings but with the constant attacks coming from President Trump’s Twitter account the stock has declined since the earnings report’s rally.

GOOG, GOOGL, and AAPL all showed strong earnings but have been declining over the past week, too, most likely being brought down by the rest of the FAANG stocks.

Your take away from this earnings season is to understand that all stocks can be dangerous.  Stocks are capable of falling faster than they gain.  The market has no sympathy for anyone who decides to play in its dangerous waters.  If you are an investor you can ignore this headline.  If you are trading, take note and know that no matter the indications, it is dangerous to hold a stock during an earnings report.  Past results have no guarantee of future earnings and growth.

The Trades

Here are the trades I have made over the past 2 weeks.  These moves have brought me $792.61 in total realized gains, not bad for part-time work!  Follow me on Twitter for all my trades live!

7/16 Sold 13 shares of GOOG for $1,180.00 each, total sale $15,334.85.  Profit $509.90, about 3.4%.
I had bought those shares on 6/13.
I sold these before earning because I did not want to take the risk of losing the gains I had already made.

7/16 Bought 56 shares of TSLA for $309.32 each, total cost $17,327.39
7/17 Sold the same shares for $312.00 each, total sale $18,429.15.  A profit of $139.42, about 0.8%.
When the share price declined, I took the small profit that was available.

7/17 Bought 48 shares NFLX as it rebounded from the poor earnings report.  The share price was $383.84, total cost $18,429.15.
Sold them a few minutes last as the price reversed direction.  Shares sold at $380 each, total sale $18,234.80.  A loss of $194.35, about 1%.

7/18 as oil prices have jumped around I saw that MRO was at an attractive level to buy in.
Bought 920 shares of MRO for $20.17 each, total cost $18,557.49.

7/24 sold all 920 shares of MRO for $20.74 each, total sale $19,075.49.  A Profit of $518.00, about 2.7%.

7/24 Bought back into TSLA, 66 shares for $301.56 each, total cost $19,907.57
I missed several great cash-out opportunities because I was working and not able to watch it.
7/27 Finally sold for $302.95 per share as the price began to plummet.  Made a profit of $81.91, about 0.4%.

7/27 Bought 548 shares of TWTR, for $36.44 each, total cost $19,974.07.
I was thinking the share price might rebound after a bad earnings report sent the shares on a premarket slide.
I was wrong, the price continued to decline, I sold when the price reached $35.98.  Total sale $19,711.80, a loss of $262.27, about 1.3%.

New CRYPTO Investment

As the week drew to a close and Bitcoin continued to look strong I bought into RIOT, a company whose primary business is the mining of cryptocurrencies.  I bought 1,300 shares for $7.69 each, total cost $10,001.56.  As the price of Bitcoin rises this stock will likely follow.  If the price of Bitcoin declines this stock is likely to follow.  I will hold this stock until I can cash out a good profit or Bitcoin collapses.

Final Notes

Every Friday I contribute $50 into my Brokerage account and $105 to my IRA.  I did so on both 7/20 and 7/27.

On 7/27 I bought 25 shares of MJ an ETF that follows the legal weed industry.  I paid $26.50 per share, $667.45 total.
This is part of my retirement, my goal is about 25% in this ETF and the other 75% in PRGFX, a fund that follows the S&P500.
You can always view all my current investments here.

I had a side hustle come through for a nice profit of $1,270.00.  I deposited this into my brokerage account on 7/17.

R2B coin, a new cryptocurrency, that I put $543 into back in February, is scheduled to begin trading on 8/23.  The current listed value is over $32,000. Follow this blog to see if I can actually sell the coins for anything close to that.

I have made several high-risk, high-reward bets in the past few months.  Follow this blog to see what makes a profit and what goes bust.  Real Profits, Real Losses, FREE LESSONS!

Thanks for reading and Happy Trading!