Search This Blog

Thursday, February 28, 2008

No Video Today. Today, we have Voice . . .

Challenge Accounts:

Investing Account Balance: $131.14

Stock / Futures Trading Balance: $604.89
Online Savings Balance: $2.06


Ok, today my video editor is giving me fits. I'll get the next videos out to finish my first investment series in the next few days.

However, today? Today we have voice chat. A program that will allow traders, at the push of a button, to voice chat with one another. I thought it might be a good idea to have a place that traders can go, and shoot the breeze. I've seen 'chat shoutboxes', and these work very well. Places that traders type out what they're thinking about numbers, trade ideas, and generally talk shop. So I thought, why not a place that you can do this with voice? I went ahead, and paid for a Ventrilo Voice chat server specifically for this topic. In addition, I've placed a widget in this blog, to show you who's in the Ventrilo Server at any given time. It 'just' went up. I'm "Dan" - for those that don't know.

If you are familiar with Ventrilo the following instructions will seem very easy. If you're not familiar with Ventrilo, I outline the directions below.

Here's a step by step process of what you'll need, and how to install everything if you're interested. If you're already familiar with Ventrilo, you can pretty much just jump down to the end of the instructions list for the IP, Port #, and password . . .

1) You can listen through just regular speakers. In order to talk, you'll need a headset, with a microphone.

2) If you don't already have it, you'll need to download the program "Ventrilo". It's free. Go to this page, and then download the version that says: Windows i386 bit for Windows. If you have another OS, download the appropriate client program for that OS.

3) If you don't already have the program, go ahead and install what you just downloaded, by running the program.

a) Please make sure in the Ventrilo program, when you
click the SETUP button - before you join, that
"Use Push-To-Talk Hotkey" box is checked.

b) Select a key to use for your "Hotkey". Personally I use F10. That's the key you'll push when you wish to talk.

c) You can then use the "Test" to see how your voice comes across in Ventrilo.

4) Once Ventrilo is installed, and you run it, you'll see a spot where it says "User Name: ___________________ ->"

Ok, that little arrow on the right? Click on that arrow. Then hit the button that says "New" Enter your name.

5) You'll see another area that says "Server: ______________ ->"

Click on the little arrow. Then hit the button that says "New" and name the server "Market Buzz"

Here's the information you'll need

Hostname or IP: v35.darkstarllc.com
Port: 4584
Password: PFEC001root

That password is Penelope, Frank, Eric, Cat, zero, zero, one, Robert, Octagon, Octagoon, Tom.

Hit enter, and then CONNECT!

Wala. You're in.

(I'm going to be editing this post in a few days, and removing that password. If you are reading this after the first few days? Then leave a comment at the end of this blog, and I'll make sure to get you the password)

* * *

Investing Account Balance: $131.14
Stock / Futures Trading Balance: $604.89
Online Savings Balance: $2.06


Total Trades and Investments: 2
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $82.56
Average Loss: $82.56
Accuracy Rate: 0%
Average Reward: $0.00
Risk Reward Ratio: N/A

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research.

Tuesday, February 26, 2008

Investment Series - Dollar Cost Averaging

Challenge Accounts:

Investing Account Balance: $131.14

Stock / Futures Trading Balance: $604.89
Online Savings Balance: $2.06

On this blog, I have talked a lot about trading. A few days ago, I switched gears, and started discussing investing a little more.

Now mind you, I still trade. For those that follow this Daily Blog, you know that I just finished up a trade on the e-mini S&P 500 Futures Index. On the previous video, I discussed the importance of looking for dividend stocks that have a DRIP program and considering Seasonality when looking to time your accumulation of more shares. In this video, I discuss dollar cost averaging in greater detail. . .

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)



Tomorrow, I will discuss the concept of "Fair Value" . . .

* * *

Investing Account Balance: $131.14
Stock / Futures Trading Balance: $604.89
Online Savings Balance: $2.06

Total Trades and Investments: 2
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $82.56
Average Loss: $82.56
Accuracy Rate: 0%
Average Reward: $0.00
Risk Reward Ratio: N/A

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research.

Sunday, February 24, 2008

Investment Series - Consider Seasonality

Challenge Accounts:

Investing Account Balance: $131.14

Stock / Futures Trading Balance: $604.89
Online Savings Balance: $2.06

On this blog, I have talked a lot about trading. A few days ago, I switched gears, and started discussing investing a little more.

Now mind you, I still trade. For those that follow this Daily Blog, you know that I just finished up a trade on the e-mini S&P 500 Futures Index. On the previous video, I discussed the importance of looking for dividend stocks that have a DRIP program. In this video, I discuss an aspect of my dollar cost average system; which is considering seasonality.



Tomorrow, I will discuss Dollar Cost Averaging (DCA) a bit more.

* * *

Investing Account Balance: $131.14
Stock / Futures Trading Balance: $604.89
Online Savings Balance: $2.06

Total Trades and Investments: 2
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $82.56
Average Loss: $82.56
Accuracy Rate: 0%
Average Reward: $0.00
Risk Reward Ratio: N/A

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research.

Saturday, February 23, 2008

Challenge Accounts: Trade - March E-Mini S&P 500 Put

Challenge Accounts:

Investing Account Balance: $131.14

Stock / Futures Trading Balance: $604.89
Online Savings Balance: $2.06


Wild spike up on volume at the end of Friday. While I was watching it, I was thinking a few things.

I didn't get the volatility out of the market that I was hoping for. Theta was losing value by the day. Wild jump up near the end that put us back up in the same stupid channel we've been in for 8 days. Weekend approaching. I had already been in the trade for about 7 days, which is my swing trading time frame. We have a seasonal spike up in the stock market approaching.

So I dumped out of the trade. I exited the e-mini S&P 500 Put at 0.50, which means I lost 1.00 on this trade, or $50.00 before commissions, and approximately $28.60 in commissions, leading to an overall loss of $78.60 or so. I'm looking at an Orange Juice trade in the near future. Depends on how things shape up on that route.

The following video presents the "Week in Review"



* * *

Investing Account Balance: $131.14
Stock / Futures Trading Balance: $604.89
Online Savings Balance: $2.06


Total Trades and Investments: 2
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $82.56
Average Loss: $82.56
Accuracy Rate: 0%
Average Reward: $0.00
Risk Reward Ratio: N/A

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research.

Friday, February 22, 2008

Investment Series - What Sort of Dividends?

Challenge Accounts:

Investing Account Balance: $131.14

Stock / Futures Trading Balance: $594.19 - Additional Position Worth: $55.00
Online Savings Balance: $2.06

On this blog, I have talked a lot about trading. A few days ago, I switched gears, and started discussing investing a little more.

Now mind you, I still trade. For those that follow this Daily Blog, you know that I'm in the midst of a trade with the e-mini S&P 500 Futures March contract. I didn't get the volatility I was hoping for in this trade. I'm still holding onto it for the next few days, and my profit stop remains at 3.75 ($187.50), giving me a risk / reward ratio. We'll see how the next 5 trading days unfold.

Back to investing. I was discussing the importance of dividends in the previous video. However, in the following video, I discuss a little more what I look for in a dividend company:



Here is the link to the introductory video with the Khan Academy on reading balance sheets.

The next entry within this series, will discuss one of the most important facets and tools of some stocks that pay dividends, that allow you to compound your returns with a single purchase.

Edit: Dumped out of the E-Mini S&P 500 option for the loss today. Will get the final numbers, and update the money management numbers for tomorrow.

* * *

Investing Account Balance: $131.14
Stock / Futures Trading Balance: $594.19 - Additional Position Worth: $50.00
Online Savings Balance: $2.06

Total Trades and Investments: 1
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 1
Average Drawdown: $86.51
Accuracy Rate: N/A
Average Reward: $0.00
Risk Reward Ratio: N/A

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research.

Thursday, February 21, 2008

Investment Series - The Importance of Dividends

Challenge Accounts:

Investing Account Balance: $131.14

Stock / Futures Trading Balance: $594.19 - Additional Position Worth: $50.00
Online Savings Balance: $2.06

On this blog, I have talked a lot about trading. A few days ago, I switched gears, and started discussing investing a little more. In the following video, I discuss the importance of Dividends. Dividends is cash or stock paid to you, for simply owning shares of said stock. Different companies have different ways, and time periods that they pay dividends. I avoid investments on stocks that pay no dividends. But I talk more about that, in the following video:



The beautiful thing about investing? It lifts you up above the noise of the market. It lifts you above 'tick fever', and the incessant need to watch every stroke of the market. And Dividends is a constant 'payday', when your portfolio includes a basket of such stocks.

The next entry within the 'investment series' will discuss the sort of dividends that I look for ...

* * *

Investing Account Balance: $131.14
Stock / Futures Trading Balance: $594.19 - Additional Position Worth: $50.00
Online Savings Balance: $2.06

Total Trades and Investments: 1
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 1
Average Drawdown: $86.51
Accuracy Rate: N/A
Average Reward: $0.00
Risk Reward Ratio: N/A

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research.

Wednesday, February 20, 2008

February 20th, 2008 Stock Market Morning thoughts, and Investment Series Continues

Challenge Accounts:

Investing Account Balance: $131.14

Stock / Futures Trading Balance: $594.19 - Additional Position Worth: $50.00
Online Savings Balance: $2.06


Ok. The other day I bought an ESH8 1100 Put for about 1.50 or around $89.00 in the stock / futures trading account. A profit stop is in place with a good till cancel Limit order to sell it at 3.75. Today the market tried to rise higher yesterday, but in the face of $100.00 oil it quickly retreated. I was still looking for a break below the support trend-line that has formed over the last few days.

This morning I woke up to find the futures market had taken a bit of a hit, and sank lower. Which is good. As I sit here, and at the time of this writing, there are housing stats and CPI numbers are due to be released in 22 minutes.

Switching gears, I said some time ago that on my videos on YouTube, I'd be giving a little further information on investing. It's very important, when you look at your investment portfolio, to get out of the same mindset that you use for trading. I discuss that in this video:



More videos are forthcoming, and I'll try to upload the videos on the Investment Series every evening at my channel on YouTube.

* * *

Investing Account Balance: $131.14
Stock / Futures Trading Balance: $594.19 - Additional Position Worth: $50.00
Online Savings Balance: $2.06


Total Trades and Investments: 1
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 1
Average Drawdown: $86.51
Accuracy Rate: N/A
Average Reward: $0.00
Risk Reward Ratio: N/A

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research.

Monday, February 18, 2008

ESH8 Put and Thoughts on Investing . . .

Challenge Accounts:

Investing Account Balance: $131.14

Stock / Futures Trading Balance: $594.19 - Additional Position Worth: $55.00
Online Savings Balance: $2.06

Ok. The other day I bought an ESH8 1100 Put for about $89.00 in the stock / futures trading account. Today, I entered a profit stop with a good till cancel Limit order to sell it at 3.75 Limit. This would give me a little more than 1:2 risk reward ratio on the trade. The theta on this option is great enough that I really have a lot of 'wiggle' room on this option. Plus the volatility that this market has been displaying has demonstrated that there's no telling what even 10 days can do. And volatility is exactly what we like when dealing with options.

The futures jumped up a little today. Which is sort of silly, because the volume is as great as the dirt in my toe jam, and there is no underlying movement today on the actual stock market. ;^) Tuesday and Wednesday will give us a more clear picture on what the S&P will be doing.

Ok, on my YouTube videos (Subscribe on my page at YouTube - since not all my videos make it to this daily blog) - I'm going to focus in on Investing. I've talked a LOT about trading, but not as much about investing. So I will have a few videos that deal with my separate investment accounts that I run as well.

* * *

Investing Account Balance: $131.14
Stock / Futures Trading Balance: $594.19 - Additional Position Worth: $55.00
Online Savings Balance: $2.06

Total Trades and Investments: 1
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 1
Average Drawdown: $86.51
Accuracy Rate: N/A
Average Reward: $0.00
Risk Reward Ratio: N/A

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research.

Saturday, February 16, 2008

What is the difference between Investing and Trading?

Challenge Accounts:

Investing Account Balance: $131.14

Stock / Futures Trading Balance: $594.19 - Additional Position Worth: $55.00
Online Savings Balance: $2.06


Ok. I've said it a ton of times. Trading and Investing are different things. Trading is not investing, and investing is not trading. I've also said that trading is not about Wealth creation. What exactly do I mean by that since I don't have a problem with trading and as I stated the other day, I recognize it's benefit to our economy? I discuss the difference between the two in this video:



In the future? I will be discussing more on the 'investment' route.

* * *

Investing Account Balance: $131.14
Stock / Futures Trading Balance: $594.19 - Additional Position Worth: $55.00
Online Savings Balance: $2.06


Total Trades and Investments: 1
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 1
Average Drawdown: $86.51
Accuracy Rate: N/A
Average Reward: $0.00
Risk Reward Ratio: N/A

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research.

Friday, February 15, 2008

Speculation benefits the Economy

Challenge Accounts:

Investing Account Balance: $131.14

Stock / Futures Trading Balance: $683.49
Online Savings Balance: $2.06


Ok. I've heard enough. On the news, on speeches, everywhere you turn, High Oil Prices are the fault of the speculator.

WRONG!!

I discuss this further here.



And while a small amount of inflationary pressure is built into speculating? That inflationary pressure tends to occur at the peaks, which means the prices will come back to a rational area given the supply situation. The markets are efficient.

The end story here? Don't blame the speculator, because the SUPPLY situation is out of whack. The speculator is just trying to find the rational, fair price given that supply situation. We have all gotten ourselves into this mess with Oil and our dependency on it. Without Oil, civilization stops. It's in our clothes, computers, walls, paint, everything. It's not just about the price we pay at the pump. We are the consumer, and we have driven the problem. It is not as simplistic as blaming the very people who are trying to find a rational price.

And it's funny. When you hear people blame speculators? They never describe the process of speculation. Those people will never discuss those who SHORT Oil (Looking for a profit from falling prices). No. They just try to paint a picture of profiteers. Since our society is very pathetic when it comes to economic education? People fall for it.

But it is a false concept.

EDIT: ALSO, Challenge Accounts - Just placed an order to buy one March expiration ESH8 Put at 1.50 Limit on the 1100 Put on a Day Order. I'll see if I get a fill. Total risk is around $70.00.

EDIT: Further. Just filled on a March expiration ESH8 Put at 1.50. Now long one Put option on the E-Mini S&P 500. Very short term trade.


* * *

Investing Account Balance: $131.14
Stock / Futures Trading Balance: $683.49
Online Savings Balance: $2.06


Total Trades and Investments: 1
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 1
Average Drawdown: $86.51
Accuracy Rate: N/A
Average Reward: $0.00
Risk Reward Ratio: N/A

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research.

Thursday, February 14, 2008

How to Begin: Roadmap for Implementation

Challenge Accounts:

Investing Account Balance: $131.14

Stock / Futures Trading Balance: $683.49
Online Savings Balance: $2.06

Ok. We've talked about what you need to look out for in previous entries when you first start out for. Mistakes to avoid. We've talked about what you need to educate yourself with, when starting out. After months, you've studied, and you're ready to begin. Now what?

I discuss that in this video:

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click here to view the entry ...)





* * *

Investing Account Balance: $131.14
Stock / Futures Trading Balance: $683.49
Online Savings Balance: $2.06

Total Trades and Investments: 1
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 1
Average Drawdown: $86.51
Accuracy Rate: N/A
Average Reward: $0.00
Risk Reward Ratio: N/A

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research.

Wednesday, February 13, 2008

How to Begin Series: An Educational Roadmap (VIDEO)

Challenge Accounts:

Sharebuilder Balance: $131.14

optionsXpress Balance: $683.49
ING Orange Savings Balance: $2.06

Question I receive more than any other, bar none - is . . . How do I begin in the markets? I mention the stock market in this video. But the principles apply to the Forex, to day trading, commodity futures, whatever. In Pt 1 (the previous two days), I started talking about my story, and how I started off with trading back in 1996. I finish that little story in the last video. Now, HOW TO BEGIN? How do you begin in this business? Education. I discuss the 'roadmap' for that, in this video . . .



Tomorrow, I'll discuss actually implementing steps, to ease into actual trading.

* * *

Sharebuilder Balance: $131.14
optionsXpress Balance: $683.49
ING Orange Savings Balance: $2.06

Total Trades and Investments: 1
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 1
Average Drawdown: $86.51
Accuracy Rate: N/A
Average Reward: $0.00
Risk Reward Ratio: N/A

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research.

Tuesday, February 12, 2008

How to Begin? A Traders Story Continued . . .

Challenge Accounts:

Sharebuilder Balance: $131.14

optionsXpress Balance: $683.49
ING Orange Savings Balance: $2.06

Yesterday I began to ask the question that I receive more than any other in emails, pm's, on forums, etc. "How do I begin in the markets?" So, I began with my story. How I started off, and the many lessons that can be learned from that experience. Today, I continue that story in the video below.

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click This Link ...)



You can find the rest of this playlist here, or permanently linked at the top of this blog . .

Tomorrow, we'll talk about what educational steps a person needs to take, when learning about the markets . . .

* * *

Sharebuilder Balance: $131.14
optionsXpress Balance: $683.49
ING Orange Savings Balance: $2.06

Total Trades and Investments: 1
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 1
Average Drawdown: $86.51
Accuracy Rate: N/A
Average Reward: $0.00
Risk Reward Ratio: N/A

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research.

Monday, February 11, 2008

How to Begin?

Challenge Accounts:

Sharebuilder Balance: $131.14

optionsXpress Balance: $683.49
ING Orange Savings Balance: $2.06

Ok. Good information Airelon. But I want to trade. How do I begin? How do I get started?


Great question. How to begin? What do you start with first? This is the question I get asked more than any other, in emails, pm's, on forums, etc. Bar none. So I decided to make a series of videos dedicated to just that topic. I start off with my own story, that covers my trading experience from 1996 to about 1998 (If memory serves me correctly, I think it was 1998 by the time I got my head screwed on straight). There are a lot of valuable lessons in this little story.

Here is part one in the series:

(Video Included. If you're seeing this entry elsewhere and cannot see the Video? Click This Link ...)



You can find the rest of this playlist here, or permanently linked at the top of this blog . .

* * *

Sharebuilder Balance: $131.14
optionsXpress Balance: $683.49 ($100 Monthly deposit still clearing)
ING Orange Savings Balance: $2.06

Total Trades and Investments: 1
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 1
Average Drawdown: $86.51
Accuracy Rate: N/A
Average Reward: $0.00
Risk Reward Ratio: N/A

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research.

Thursday, February 7, 2008

Challenge Accounts: Roadmap for the Future - The eventual goal

Challenge Accounts:

Sharebuilder Balance: $131.14

optionsXpress Balance: $683.49 ($100 Deposit still clearing)
ING Orange Savings Balance: $2.06

Where do I plan on taking these challenge accounts? How do I plan on making them grow? The same way I did my private accounts. I discussed that in this video:



When the accounts begin to grow, the will begin to feed each other at regular intervals based on the risk that I feel each account represents.


* * *

Sharebuilder Balance: $131.14
optionsXpress Balance: $683.49 ($100 Monthly deposit still clearing)
ING Orange Savings Balance: $2.06

Total Trades and Investments: 1
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 1
Average Drawdown: $86.51
Accuracy Rate: N/A
Average Reward: $0.00
Risk Reward Ratio: N/A

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders who should make their own decisions based off their own research.

Wednesday, February 6, 2008

Challenge Accounts: Real Trading brings Real Emotions. And an opportunity to learn

Challenge Accounts:

Sharebuilder Balance: $131.14

optionsXpress Balance: $683.49 ($100 Deposit still clearing)
ING Orange Savings Balance: $2.06

The more I thought about the trade we missed yesterday, the more aggrivated I got. I've been running this blog since October 2007, and though I think I've put a lot of great information out there? There has only been 1 trade. I'm anxious to get this challenge thing really rolling along. It's my current project, and I would like to see it start to blossom.

Therein lay the danger.

I ran into a situation today. It provoked an emotional response. So this gives us a wonderful opportunity to talk about that. You have to realize these sorts of emotions when they come up when you are going to have actual trades.

And I love trading. I'm not sure what it is about it? But I love the wheel and the deal. The offers, the market. Everything. But again, there is a danger there. I discuss that in this video.





I recorded that last night. Now look what has happened today. You see why I say: Don't chase the market - it will involve you in the mob mentality? Something else that will help you fight these natural emotional responses? It's something I learned after a few years.

Don't worry. There will always be another opportunity. Don't chase after a lost duck.

* * *

Sharebuilder Balance: $131.14
optionsXpress Balance: $683.49 ($100 Monthly deposit still clearing)
ING Orange Savings Balance: $2.06

Total Trades and Investments: 1
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 1
Average Drawdown: $86.51
Accuracy Rate: N/A
Average Reward: $0.00
Risk Reward Ratio: N/A

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders

Tuesday, February 5, 2008

Airelon's Thoughts: February 2008

Challenge Accounts:

Sharebuilder Balance: $131.14

optionsXpress Balance: $583.49 ($100 Deposit inbound)
ING Orange Savings Balance: $2.06

The stock market seems to have rallied from our strong seasonal date of January 22nd, but these last few days the volume seems to be falling off, and we are approaching a 1.28 reversal day (A Larry Williams tool), as well as stalling below the 45 day EMA. Therefore, as I stated before, this may have been the first wave in our bear market. If this proves to be the case, then the market will begin to fall anytime within the next 3 days, and lower prices will ensue.

Therefore, I put in a bid to buy one March 2008 E-Mini S&P 500 1090 put at 1.75 Limit ($87.50 before commissions). This option has 44 days until expiration. This is not the February option on the March contract. This is the March 2008 option on the 1090 put that currently is showing as a bid / ask spread of 1.70 x 2.10. This order is now active, and I'll edit this post if I get a fill. My $100.00 deposit for the month of February is inbound. If we have a loss on this option, the total risk appears to be about $87.50 after commissions. The account equity would then be around $595.00. Which again, is still higher than our current balance. If we have a gain, I will look to take profits at around $178.00 - depending on market conditions and my established trading plan, that takes into account time, price and volatility; and would increase the account balance to around $775.00

Edit: Market slammed down. No fill. Cancelled the order. Nice to be right. Not so nice to not profit from it. But no worries, plenty of more opportunities.

* * *

Sharebuilder Balance: $131.14
optionsXpress Balance: $583.49 ($100 Monthly deposit inbound)
ING Orange Savings Balance: $2.06

Total Trades and Investments: 1
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 1
Average Drawdown: $86.51
Accuracy Rate: N/A
Average Reward: $0.00
Risk Reward Ratio: N/A

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders

Monday, February 4, 2008

Challenge Accounts: How to deal with Drawdown?

Challenge Accounts:

Sharebuilder Balance: $131.14

optionsXpress Balance: $583.49
ING Orange Savings Balance: $2.06

We mentioned some time ago that drawdown is a reality, and every account must be prepared for it.

What about the Challenge Accounts? We just said that every account must be prepared for it. How does drawdown relate to the low-funded, and what strategies need implemented in a challenge account to deal with drawdown? This is something I discussed within the following video:



This is precisely why the Challenge accounts did not trade again, until Rule #2 more than doubled the account equity.

A trade here and there won't hurt as long as the long as the regular contributions to the account are greater than the single trade that the person is taking on. In other words, REWARD your account with increased capital, for every RISKED trade you have. Sound familiar? Yeup. Risk / reward. Of course, that's just to get to a point where you can trade actively. Risk / Reward ratios actually relate to rewards from trades. Not just pouring money into an account. But these are the sorts of things you have to think about - if you are in the low-funded situation.

So for the Challenge Accounts? This means at the current moment I can withstand a Consecutive Trade Drawdown of 1, before I have to hold off on trading again, until the capital has covered twice my loss.

* * *

Sharebuilder Balance: $131.14
optionsXpress Balance: $583.49
ING Orange Savings Balance: $2.06

Total Trades and Investments: 1
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 1
Average Drawdown: $86.51
Accuracy Rate: N/A
Average Reward: $0.00
Risk Reward Ratio: N/A

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders.

Friday, February 1, 2008

The Low Funded Challenge Accounts: February 2008

Challenge Accounts:

Sharebuilder Balance: $131.14

optionsXpress Balance: $583.49
ING Orange Savings Balance: $2.06

These sub-accounts were created by me back in October 2007 as a main feature of this blog. Their purpose, as well as the purpose of many of the articles in this blog, is to assist the low-funded trader understand what principles he needs to consider when trying to get started in the markets. That as long as one enters this business with the proper principles, strategy, education and emotional discipline in hand, you can 'make it' in this business. These are actual sub-accounts that I own, and I will look to for growth. I will announce actual trades and investments that I perform in them, and the reasons for my decisions as a means to educate others.

In the beginning of this experiment, I placed $130.00 with Sharebuilder as a long-term investment account, and I placed $370.00 in the account for trading Futures options. I thus termed this the "$500 Challenge". Since we now have $716.69 as a cumulative total in these accounts, not $500, I will term this the "Low-Funded Challenge" instead of the "$500 Challenge". At times I will refer to them simply as the "Challenge" accounts. I later added a small ING Savings account that has $2.06 in it.

I also had three rules for the "Challenge" accounts. At the beginning of each month, I review and consider where we stand, and how those three rules impact the current months decisions. So let's do that for February.

Rules for the Challenge Account:

1) The initial investment is $500.00, to be split amongst the accounts. We did that back in October of 2007. $130 went to Sharebuilder for longer term investments, and $370 went to the Xpresstrade brokerage for futures options purchases. Xpresstrade was later bought out by "optionsXpress", therefore this is now the optionsXpress account.

2) Each month, I can contribute $100.00, that can be split amongst the accounts however I choose. In other words, I can send $30.00 to Sharebuilder, $70.00 to optionsXpress; or $100.00 to optionsXpress, and nothing to Sharebuilder, etc. We had one trade for a loss of $86.51, but with our contribution last month, our balance surpassed our previous balance of $570.00, to the current $583.49. We received a dividend payment in our Sharebuilder account of $0.37, therefore, our balance there is currently $131.14.

Now we have arrived in a new month; February. I am going to contribute the entire $100.00 to the optionsXpress account again. If an opportunity arises to my methodolgy for a trade where the risk is under the $100 that will be coming in for this month, then I will do so. But at the current time, I don't have anything. The reason I am sending so much towards the optionsXpress account, is that this accounts planned growth rate is higher than the Sharebuilder account. Therefore, it receives more capital to work with. The $100.00 will be sent to optionsXpress on February 4th, which means it probably won't clear until about 2/9/2008, or so; bringing our account balance to $683.49

The Sharebuilder account remains idle at the current time. Given the state of the economy and market, this isn't a bad thing at all. How much is the market down right now? 7.5%? But we're at least bringing in 3% on that money right now. Mind you, we only have $131.14. And to be honest, with Bernake's recent move, we're not even keeping up with the inflation rate at the moment. However, the commissions would eat me alive for what little shares I could purchase in the Sharebuilder account. We discussed some time ago that for every $45.00 stock we buy, we want at least 15 shares, or $680.00. The Sharebuilder account will earn approximately 3.18% interest on the money that's in there 7 day yield, and there are no fees for either account. Which means we are earning under inflation, but that account isn't planned to be using the money market yield to grow. I honestly think next month we'll start adding capital to that account to eventually invest with.

3) I'll be using regular investment and trade vehicles. Bonds. Stocks. ETF's. Futures Options. In February, we are on the lookout for any Futures options trade where the risk is under $90.00 or so. But only one trade for now, to preserve our account equity. Open-mouthed The risk / reward ratio should be at least 1:2. However, there's no guarantee we'll run into such a trade. I'm looking at some Soybean, Meal, and Oil longs for my regular accounts. Or possibly an OJ short this month for my regular accounts. But if the risk is higher than $90.00 for any such trade? Then the low funded account can't take that sort of risk. Remember our first video? It all starts with risk analysis, as it relates to the size of the account.

If it is one thing that I've learned, is that the next time I perform this experiment, I will start out with a higher amount than $500. Probably $1300.00. Open-mouthed

Februarys Balances after contribution:

Sharebuilder Balance: $131.14

optionsXpress Balance: $683.49
ING Orange Savings Balance: $2.06

* * *

Sharebuilder Balance: $131.14
optionsXpress Balance: $583.49
ING Orange Savings Balance: $2.06

Total Trades and Investments: 1
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 1
Average Drawdown: $86.51
Accuracy Rate: N/A
Average Reward: $0.00
Risk Reward Ratio: N/A

This is not an investment or trading recommendation. The losses in trading can be very real, and depending on the investment vehicle, can exceed your initial investment. I am not a licensed trading or investment advisor, or financial planner. But I do have 12 years of experience in trading and investing in these markets. The Challenge accounts are run for the education of other traders.

Search Investing and Trading Articles and Products