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Wednesday, December 31, 2008

Wednesday Recap Podcast for December 31, 2008

"Meh" - Bart Simpson

This is my Wednesday recap podcast for December 31, 2008.

I discuss the flat stock market action, the possibility that Morgan Stanley has “deleveraged”, and the business cycle …


You can download this podcast here.

Don't forget, on Friday, January 2, 2009 we have the Blog TV show ...

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Note: 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 13 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, and tolerance for risk.

Tuesday, December 30, 2008

The Low Funded Challenge Account Project: January 2009

December's Challenge Account Balances:

Investing Account Balance: $408.87 (Average)
Stock / Futures Trading Balance: $974.62
Online Savings Balance: $122.97

The original video explanation of the Challenge Project is to be found here.

A video summary of my decisions for this month is to be found at the end of this blog entry.

Back in October of 2007, I created sub-accounts from my main brokerages; as a main feature to this blog, and in November of 2007, I began the Challenge Project. 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, or if starting up again because his or her account account has been wiped out. These are actual sub-accounts at my brokerages that I own, and I will look to for growth. I will announce actual trades and investments that I perform in them, and the money management rationals and reasons for my decisions as a means to educate others. 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.

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 later added a small ING Savings account that has been built up to a balance of $122.97. Due to the initial investment, I once termed this the "$500 Challenge". Since we now have much more in these accounts than $500 at the end of December, I will term this the "Low-Funded Challenge Project" instead of the "$500 Challenge". At times I will refer to them simply as the "Challenge Project" accounts.

I also had three rules for the "Challenge Project" 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 December of 2008.

Rules for the Challenge Account:

1) The initial investment is $500.00, to be split amongst the accounts. After creating the accounts in October of 2007, we had our initial deposited transferred in November 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. This account is the 'trading' account, for stocks, ETF's, and futures options. Therefore, rule #1 is always complete.

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. Last month we deposited $60.00 to the Investing Account to start rebuilding cash balances, $10.00 to the Trading account, and $30.00 to the Savings account.

For January 2009's deposits, I decided to send nothing to the Savings Account, $60.00 to the Investment Account, and $40.00 to the Trading Account.

I said last month that we won't invest again in the stock market until two things happen. 1) We have more cash to properly position our next purchase and 2) Market conditions improve, and the economic data prices itself into the market. With this months deposit? We'll be in a position to invest in a stock if the opportunity arises. I'll illustrate why within the vlog entry below. It has to do with position sizing.

I'm probably not going to be engaging in any trades for the Challenge project in January, as 1) The Account Balance is still very, very low, and therefore 2) the primary job is to get the account equity bumped up.

That works out well. Why?

Well, look again to the growth strategy we've had all along. If you note my project strategy video (located here), for a long time, we were looking to get past the first step in this phase of the project. Thus, we were looking for the trading account to have an equity greater than $900.00. We've accomplished this, as we now have a balance of $974.62 at the end of December. The next goal is to get the account past $1,100.00. But what have I said all along?

That the goal right is not to actively trade that account. It's to get the account equity balance bumped up. I want to say that again. The goal right now, isn't to primarily trade that account. It's to get the account equity balance bumped up. So this works out well.

3) I'll be using regular investment and trade vehicles. Bonds. Stocks. ETF's. Futures Options. I want to wait and bump up the equity, so I probably (probably) will not trade anything in the Challenge Trading account in January. However,

We're cruising right along ...

(Here's the video recap. If you're seeing this from Email subscription? Click on the Title Link in the Email to View the Video ...)



January Balances after Deposit from Rule #2

Investing Account Balance: $480.00 (This will fluctuate with the BAC and KO stock)
Stock / Futures Trading Balance: $1,014.62
Online Savings Balance: $122.97 (Before Interest Payment)

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Current Challenge Project Account Balances and
Money Management Numbers:

Total Trades: 7
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $55.18
Average Loss: $74.27
Accuracy Rate: 28.57%
Average Reward: $175.34
Risk : Reward Ratio: 1 : 2.1
Trading Money Gain / (Loss): Up + $7.33

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 13 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, and tolerance for risk.

Blog TV Show is Back!

Remember, this Friday, at 5:00 pm EST on my Blog TV channel ...

Monday, December 29, 2008

Airelon's "Email Question" Podcast for December 29, 2008

"And it came to pass, that when he was returned, having received the kingdom, then he commanded these servants to be called to him, to whom he had given the money, that he might know how much every man had gained by trading." - The Bible, Luke 19:15, American King James Version

I've taken to the habit of cleaning out my email inbox of questions that I’ve received during the week on Monday's; via a podcast.

This week, I answer questions regarding stock screeners, sources for charts, mentoring, Don Harrolds "Rick Santelli" video that I had here on the blog, forex trading, trading systems, mutual funds, and a few other points ...

(Podcast Included. If you're seeing this from Email subscription? Click on the Title Link in the Email to hear the Podcast ...)



Click here to download this podcast. Tomorrow I'm going to have a vlog entry regarding the "Challenge Project: January 2009" ...

* * *

Note: 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 13 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, and tolerance for risk.

Saturday, December 27, 2008

Week in Review: Podango Problems and Taking a "Time Out"

"Brock laughed. "Ah, Dirk lad, you be a rare 'un. You be busted an' you still pretends. You be finished, you hear, lad? Yor Noble House be on its uppers. An' you be coward!"

"Oh, I'm na a coward, Tyler. You know that."

"You knowed the hillock where yor Great House's to go?" Brock asked, his eye glittering.

"Aye."

"It's mine, lad. I be buyin' it. Wotever you bid, I bid more."

Struan felt the blood rush to his head, for he knew that he did not have the bullion to compete with Brock now. Na unless he made the deal with Ti-sen. Na unless he sold Hong Kong out." - Tai-Pan, by James Clavell


Believe it or not? Today in Michigan? After all of my bellyaching about the cold and the snow?

It's 63 degrees Fahrenheit (18.33 degrees Celsius) out right now. The snow is melting like crazy.

Regardless, it's time for another 'Week in Review'. We have some problems at Podango that I want to talk about ...

(Podcast Included. If you're seeing this from Email subscription? Click on the Title Link in the Email to hear the Podcast ...)



Click here to download this podcast. We'll see everyone on Monday for my "Email Inbox" podcast...

* * *

Note: 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, and tolerance for risk.

Friday, December 26, 2008

Sometimes You Need a Little Humor

Like everyone else, I'm taking it a bit easy today. But I saw this today, thought of the Madoff scandal, and I actually smiled. I thought I'd share ..

Sometimes, you just have to laugh to keep from losing your mind ...

Wednesday, December 24, 2008

Comex Silver Trade

"Roses have thorns, and silver fountains mud" - William Shakespeare, Sonnet 35

With the unprecedented rate cut by the Fed with a "target" between 0.00 and 0.25% I entered a Comex Silver trade.

I had great gains on the Euro, so as I announced yesterday on Twitter, I cut that trade short just a little below break even on the entry (Down a little due to commissions as well). Gains from the Euro were preserved.


I am still holding physical silver however, and I'm looking to take advantage of lower prices to accumulate 3% into the physical from the Northwest Territorial Mint. But I'm waiting to do that, until I see a bounce off congestion with the spot price as well as the futures.

I have a few emails I'm still trying to get through. So if you've sent me an email or pm, I do have you in mind, and will be getting to them.

As well, I want to remind everyone once again that there will be no Blog TV show this Friday. However, I have already scheduled the next show for Friday, January 2, 2009 at 5:00 pm EST.

* * *

Note: 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, and tolerance for risk.

I Surrender!

Ok, ok. I guess it's gone on long enough.

It's time for a haircut.

Tuesday, December 23, 2008

The Psychology of Trading (VIDEO)

"Human beings, by changing the inner attitudes of their minds, can change the outer aspects of their lives." - William James

This video is a remake video, where I am improving the video quality, and taking care of a few other issues.

I think, at times, I try to stress money management principles so strongly to new traders? That I may end up overlooking another vital aspect of becoming a good trader.

Psychology.

And honestly, I do believe that you can understand money management principles, but if you do not understand the importance of self-discipline and emotional control? Even money management principles and strategies cannot help you as a trader. You will end up blowing up your account.

So what aspects need considered when it comes to the 'psychology of trading'? I discuss that in the vlog entry below ...

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



For a greater explanation and complete dissection of this topic? Please see Dr. Alexander Elders "Trading for a Living". The link is in the "Recommended Books" section to the side of this page.

* * *

Note: 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, and tolerance for risk.

Monday, December 22, 2008

Podcast: Clearing Out My Email Inbox on December 22, 2008

"Aspiring to a small business that does what it does very well is a noble pursuit." -Narenda Rocherolle

I've taken to the habit of cleaning out my email inbox of questions that I’ve recieved during the week on Monday's; via a podcast.

This week, I discuss building a blog and / or a website, trading through a company, further scandals on Wall Street, and my Euro trade.

Within the podcast, I talked about the view outside my window as I worked on the podcast, here's the shot:



(Podcast Included. If you're seeing this from Email subscription? Click on the Title Link in the Email to hear the Podcast ...)



Click here to download this podcast. Tomorrow I'm going to have a vlog entry regarding "trading psychology" ...

* * *

Note: 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, and tolerance for risk.

Saturday, December 20, 2008

Week in Review for December 20th, 2008

"All is quiet on the Western Front" - Im Westen nichts Neues, Erich Maria Remarque

The snow won't stop. And the temperatures continue to plummet!

Regardless, it's the end of another week, which means ... another "Week in Review"! In this "Week in Review", I spend some time going over market prices in the commodity markets, I talk about about what I would like to see on the VIX, and the 'quiet' we generally experience this time of year ...

(Podcast Included. If you're seeing this from Email subscription? Click on the Title Link in the Email to hear the Podcast ...)



To download this podcast, click here. We'll see everyone on Monday ...

* * *

Note: 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, and tolerance for risk.

Friday, December 19, 2008

Euro Explodes to New Highs, Silver Moves Along It's Average ...

"You got to know when to hold 'em, know when to fold 'em. Know when to walk away, and know when to run" - The Gambler, Kenny Rogers


With the unprecedented rate cut by the Fed with a "target" between 0.00 and 0.25%? The U.S. Dollar has collapsed, erasing all of it's strength. Which was a fantastic opportunity and trade on the Futures Euro. This one was almost a gimme.

(Click Picture to Enlarge)


But it's time for Dan to exit stage right when it comes to the Euro. No need to be greedy.

But I also need to talk about a trade that has not been quite as explosive. Silver.

(Click Picture to Enlarge)


I'm still holding on to my Silver position. I can see $12.00 to $12.50 easily in the next few weeks. However, I'm prepared for lower prices if everything deflations, and the Euro trade will more than make up for any losses that may be triggered in the Silver move ...

Unfortunately, this week there was a conflict between my BlogTV schedule and some family responsibilities. As much fun as I have with the BlogTV show folks? I have to put my family first. But stay tuned! The next BlogTV show will be on Friday, January 2, 2009 at 5:00 pm EST.

* * *

Note: 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, and tolerance for risk.

Thursday, December 18, 2008

Would You Like Some Good News?

"How do you know it's something bad? Maybe it's something good." - Chinese Parable

Today, I decided upon a longer blog text entry.

I'd like to share with you a Chinese parable that I heard some time ago. It relates to the current economic disaster we find ourselves in. It goes a little something like this:

"Many years ago, there lived a very kindly humble man in the land of China, or the "Middle Kingdom" as it is known. This man loved two things in his life. The horses that he bred and kept in his care, and his only son. However it was his son, above all else, that he treasured in this world.

One day, the stable door was left open, and one of the kindly old man's favorite stud horses escaped. When his neighbors heard the news, they came to comfort the old man. "We are so sorry you have had such terrible fortune", they told him.

Oddly enough however, the gentle old man was not angry or upset. He replied to each of them: "How do you know this is something terrible? How do know this is something bad? Maybe it's something good!", he said.

Well, only one week later, the stallion came back. But when the stallion returned? He had a beautiful, healthy and valuable white mare with him. Once more, when his neighbors heard the news, they came to the old man's home. This time, to congratulate him.
"What wonderful luck!", they told him. "Not only has your valuable stallion come back to you? But now you have an even more valuable mare for your stallion to breed with! You will come into even more wonderful fortunes!"

But the kindly old man simply replied: "How do you know this is something good? Perhaps this is something bad". Puzzled, the neighbors left.

Well, shortly thereafter his son was riding the new, valuable white mare. The mare slipped and fell upon the mans' son, breaking his leg. From this time forward, the mans son always walked with a limp.
And again, the neighbors came to the old man to offer their sympathy for the "bad luck" that had befallen his beloved son. One of the neighbors even suggested that the mare should be killed, for visiting such "bad luck" upon his family.

But the old man simply smiled and once again replied:
""How do you know this is something terrible? How do know this is something bad? Maybe it's something good!", he said. At this point, his neighbors thought that the old man had simply lost his mind. His son was lame! What good could come from such a tragedy?

Two years later an enemy invaded the country. All of the old man’s neighbors and their sons were drafted to defend the country against the attack. Because the old man’s son was lame, he did not have to join in the fighting. The war was very bad, and most of the old man’s neighbors were killed. But because his son had been hurt by the white horse two years earlier, he was spared."


The above parable is obviously used to teach the lesson that we never know what the future will bring. Life is filled with good and bad. Twists and turns. And each twist, can bring about the unpredicatable.

So what good news is on the horizon in the midst of all of this "bad"?

The Volatility Index (VIX) is Dropping: This is the best piece of news I've seen for some time. Generally, when the market is undergoing economic upheaval, the volatility increases. One sign that the market is trying to find a 'bottom', is when the volatility begins to decrease. Traders may enjoy the extreme swings? But Investors hate volatility. For investors, the quieter? The better.

Now, of course, we are in the midst of the pre-Christmas 'quiet'. Before a holiday, generally the volume tapers off, along with the volatility. But if you look to a chart of the VIX, you will find that the volatility has been dropping steadily, since it's peak last month.

(Click to Enlarge)



As well, the moving averages are showing a change in trend. I would be even more encouraged if the VIX can reach 28. Not that I consider a VIX reading of 28 as 'healthy'. That's still too high. But 28 would show a definite change in trend on the VIX, or what some call "The Fear Index".

Also keep in mind that the stock market is usually the first one into a recession, but it is also the first one out. I often tell ones that in the midst of the Great Depression, you should have been investing with stocks in 1932. During the midst of the worst of times for the general economy. Now, of course, I must insert my disclaimer here.

I'm not saying that we're at the bottom. But I do believe that the market is trying to weed out all of the garbage. This is a good thing. When the market has forced the garbage out into the open? When the 'stock market garden has been properly weeded'? Nothing but good, healthy corporations are left.

And I am not closing my eyes to reality. I understand that there may be plenty of more pain to come. I'm very concerned about the high number of ARM mortgages that have not yet reset in the United States, and are due to reset in 2009; and the possible foreclosures this could bring to an already depressed housing market. And I am of course concerned about the state of U.S. manufacturing and consumer spending.

However, amidst all of this 'bad', I do keep my eyes on signs that a bottom process is developing, so I know when to take 'nibbles' into the stock market. A decrease in the VIX is one such encouraging sign.

* * *

Note: 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, and tolerance for risk.

Wednesday, December 17, 2008

Wednesday Recap Podcast ...

"Uuhhhhhhhhhh" - Lurch the Butler, the Adams Family

And when I look at the economic outlook for the next few years? I feel like Lurch.

Uuuuhhhhhh.

Regardless, it's time for my Wednesday Recap Podcast. We discuss market action and great trades, Mr. "Madoff with $50 billion", and the "Target" Fed Fund Rate of 0.00 to 0.25% ...

(Podcast Included. If you're seeing this from Email subscription? Click on the Title Link in the Email to hear the Podcast ...)



To download this podcast, click here.

* * *

Note: 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, and tolerance for risk.

Inflation? Deflation? Commodities? What is Going On Here !?

"If Americans ever allow banks to control the issue of their currency, first by inflation and then by deflation, the banks will deprive the people of all property until their children will wake up homeless" - Thomas Jefferson


Money Supply.

Contraction.

Inflation.

Deflation.

What does all of this mean? Some people have been predicting hyperinflation. They've been predicting this for quite some time. But all of a sudden, beginning at the end of September of 2008? We began to see the effects of deflationary pressures. The exact opposite of inflation, despite the increase in the money supply. Will we still see a flight to commodities? Will this turn into a period of hyperinflation?

I discuss all of this, and more, in the following podcast ...

(Podcast Included. If you're seeing this from Email subscription? Click on the Title Link in the Email to Listen to the Podcast ...)



Click here to download this podcast. Later today, I'm going to have my "Wednesday Recap" podcast.

* * *

Note: 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, and tolerance for risk.

Podcasting problems ...

Sorry folks ...

I have uploaded my file to Podango, but unfortunately, it processed for like ... an hour. I deleted the file and re-uploaded the file? But it's still processing. We'll get everything straightened out here eventually ...

Tuesday, December 16, 2008

A Crude Awakening to Amory Lovins (VIDEO)

"Formula for success: Rise early, work hard, strike oil." - Jean Paul Getty

You know, it's very indicative of what I call the 'human problem'. When Oil was selling for $145 a barrel during the summer of 2008? Everyone was losing their minds. Oil was in the news every day, and terms like "Hubbert Discovery and Production Oil Curves" were becoming household names. Everyone was talking about "Peak Oil".

Now, with a possible Depressionary environment and subsequent weakening demand looming? With Oil at $50.00 a barrel at the time of this writing? No one is talking much about Peak Oil any longer. You'd think we grew more of the stuff overnight or something. Gasoline at the pump is cheap, and suddenly, as a collective community, we no longer care about the scarcity of the oil that runs civilization.

But the problem has not disappeared. We are quickly running out of this very real non-renewable fuel. It took hundreds of millions of years for this valuable commodity to be produced by geological forces, and humankind has nearly sucked the earth dry.

Thom363 of YouTube recently recommended a documentary that discusses this problem to myself. "A Crude Awakening" and was interested in my thoughts on the film.

I review the documentary in the following vlog, and offer some thoughts of my own on the topic ...

(Video Included. If you're seeing this from Email subscription? Click on the Title Link in the Email to View the Video ...)




The documentary is worth watching, for no other reason that it aptly highlights the reality of the problem. I think it does so it with a bit of 'over the top' melodrama. But then again, it is a very real, and very, very serious problem.

Here is a link to a video that is over one hour long, featuring Amory Lovins and "Winning the Oil Endgame". I truly recommend it to any and everyone. I find it interesting that many competitive businesses are already beginning to implement Amory's plans.

* * *

Note: 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, and tolerance for risk.

Monday, December 15, 2008

Monday's "Airelon's Email" Podcast

"Don't wait for extraordinary opportunities. Seize common occasions and make them great. Weak men wait for opportunities; strong men make them." - Orison Swett Marden (1850 - 1924)

For those who have been following the comments here on the Daily Blog, Brian has really been helping me out with a lot of good suggestions and pointers in the comments section, when it comes to podcasting.

One suggestion was to have a portion of a podcast where I answer questions from listeners.

Now at the same time? I usually receive anywhere from 20 to 30 email questions a week. Some of them touch on the same topic. It usually takes me a while to burn through them.

So I thought, why not make an entire podcast about answering those questions? Share the knowledge and interchange? Thus, below, we have my very first "Airelon's Email" podcast ...

(Podcast Included. If you're seeing this from Email subscription? Click on the Title Link in the Email to hear the Podcast ...)



Click here to download this podcast.

I have to say, I really enjoy putting podcasts together. They are much easier to put together, than say a vlog entry. But I haven't given up on my vlog entries! As a matter of fact, tomorrow I'm going to try to have up the vlog entry regarding a review of the movie "Crude Awakening" that was recommended to me by Thom363 ...

* * *

Note: 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, and tolerance for risk.

Saturday, December 13, 2008

Week in Review: The US Dollar, and Trading Backlash from Mr. "Madoff with 50 billion"

"What is called resignation is confirmed desperation." - Henry David Thoreau (1817 - 1862), in Walden, "Economy"

You know, I remember when I hated Fridays.

It wasn't too long ago that I just hated the closing market bell. I was not able to track my investments, nor was I able to trade. I was no longer able to listen to the ebb and flow of the markets. I could no longer listen to the business news.

But lately, it seems as we can almost hear a collective sigh of relief at the ringing of the closing bell.

"At last. We know it'll only be 'this bad' this week."

It hasn't been a great week. But it's still a week to review, which I do in the following podcast

(Podcast Included. If you're seeing this from Email subscription? Click on the Title Link in the Email to hear the Podcast ...)



Click here to download this podcast. We'll see everyone on Monday ...

* * *

Note: 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, and tolerance for risk.

Friday, December 12, 2008

Blog TV Show !

Don't forget, the Blog TV Show starts about twenty minutes from the time of this writing.

Fridays, 5:00 pm EST.

Lots to talk about this week!

Here's the link to tune in!

Changes Coming To The Blogging Routine

"The art of progress is to preserve order amid change and to preserve change amid order." - Alfred North Whitehead

On Wednesday I added a podcast to the blog. Which was fun. It was neat, and a lot of opportunities began to come to mind. However, with those burgeoning opportunities? Came a few questions ...

"When should I podcast? And when should I vlog? Should there be a difference? Should I just track the audio from the vlogs into a podcast? Are there advantages to seperating them? What are the advantages of keeping them the same?"

I had a few decisions to make when it comes to implementation as I have a few, very loyal YouTube viewers who have not yet made the switch to the daily blog.

Well, I've come to a few decisions, which I discuss in the following vlog entry.

(Video Included. If you're seeing this from Email subscription? Click on the Title Link in the Email to View the Video ...)



This afternoon at 5:00 pm is my Blog TV Show! Don't miss it. Tomorrow we'll have the "Week in Review"

* * *

Note: 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, and tolerance for risk.

Thursday, December 11, 2008

The Markets Wait For No Man ...

"Thus, though we have heard of stupid haste in war, cleverness has never been seen associated with long delays." - Sun Tzu, The Art of War

We've had quite a day of market action. I'm not sure if I've ever received as many emails and pm's, in as short a time period.

I put out a twitter update explaining a few of my thoughts. However, twitter only gives you 120 characters. Considering the moves that are being made in the markets, I figured that 120 characters was not enough. So what better time to have a short blog entry, detailing my thoughts. I have two courses of action that I have my eye on. I haven't pulled the trigger yet. But I'm eyeing them up.

One possibility is in physical silver, and the other is with the Euro.

The Euro is the contending currency that really showed it's strength against the U.S. Dollar today. So I'm looking at a possible entry with the Euro based of technical analysis. If we get a pull back, and then a rebound in strength with the Euro? I'd probably take a dip into this currency via the Futures markets. So in effect, I would not be transferring any money to another currency. It would simply be a means of hedging against any losses of my current U.S. Dollar holdings.

The other thought, is that of physical silver. If SIH9 reaches $11.00? I will very likely take 3% of my cash, convert it to physical silver, and store that silver at the bank.

Of course, by tomorrow morning, this could all change. I'm 'just a guy' who is a trader. But that's what I have my eyes on at the moment.

* * *

Note: 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, and tolerance for risk.

Trading For a Living ... Without Being A Trader

""Peter," he said, "There are times when you have to trust me. I'll never put you behind the eightball. As long as you're my friend, trust me. If you don't want to be my friend, fine. But I'd like you to be my friend."" - Colonel King, King Rat by James Clavell

On December 4th's blog entry, I had a discussion on the need to "Be a Trader".

This sparked some good discussions at through emails, pm's, comments and at YouTube.

A few folks raised a point that I had not thought of, which is:

"But Dan, I don't want to be a trader. My personality? I like to make things. I like to produce assets."

Which is completely understandable. The world could not exist, if everyone wanted to do what I do for a living. So I decided to have some follow up thoughts in the following vlog entry on exactly what I meant. What do I mean by "Be a trader, without trading for a living"? What do I mean by 'have the mindset of a trader'? I figured I should have some follow up comments ...

(Video Included. If you're seeing this from Email subscription? Click on the Title Link in the Email to View the Video ...)



Controlling the risk of decisions? That all goes back to those money management vlogs. Tomorrow I'm going to discuss the future direction of this blogged; vlog and podcast.

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Note: 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, and tolerance for risk.

Combating Destructive Greed as a Trader

"I know indeed how to be low on provisions, I know indeed how to have an abundance. In everything and in all circumstances I have learned the secret of both how to be full and how to hunger, both how to have an abundance and how to suffer want" - Philippians 4:12, The Holy Bible

As I mentioned the other day here on the blog? YouTube contacted me, after blocking one of my money management videos. I was under the impression that I was allowed to use under 30 seconds of any song, under the 'fair use' clause. Well, YouTube disagrees. I did not store those videos anywhere else; such as at Google Video, Metacafe, etc. Therefore, I will re-do these very important videos. At the same time? I get to improve the video quality.

I have railed on and on and on and on, regarding the fact that anyone who wishes to trade for a living? Must have a clear grasp and command of money management principles. In fact, these principles are so important, that I believe they can be of tremendous financial help to the non-trader as well.

But what will undermines anyone's ability to adhere to money management principles? What will destroy your ability to stick to a good risk / reward ratio? What destroys good reward analysis?

Quite simply put, it's a lack of emotional discipline. And one emotional response in particular that destroys emotional discipline, is greed. You cannot be greedy as a trader. It will wipe out your account faster than anything else.

Unfortunately, people who have an interest in the markets, in business, in the economy? Have been forced to listen to Gordon Gecko's "Greed is Good" speech for the last 20 years.

I personally believe that the "Greed is Good" mantra, is a load of crap. We discuss that in this vlog entry ...

(Video Included. If you're seeing this from Email subscription? Click on the Title Link in the Email to View the Video ...)




I will have another vlog very shortly as a follow up to December 4th's vlog entry of 'Trading for a Living' ...

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Note: 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, and tolerance for risk.

Wednesday, December 10, 2008

I'm Giving Her All She's Got, Captain!

"Ya kinnae change the laws of physics Captain!" - Mr. Scott

As I mentioned in this mornings podcast? I'm not too excited at what some are terming 'the bottom' in the stock market. The Bottom? We will know what the bottom in the stock market was, during this recession five years after the fact. We can all talk at that time, about the bottom, and we can discuss how it was extremely obvious it was to all of us, that it was 'the bottom'.

Now I'm a bull. I love buying stocks. I love holding great DRIP dividend stocks. But I'm not an idiot. We cannot know today, where that bottom will be and it is foolish to attempt to 'catch it'. It simply be throwing good money after bad.

There's only one thing that will sell me on the development of what I would call a developing 'relief rally'.

Price. Price makes profit. Which at this point? We do not have. Look at the following chart:


The DOW closed at around 8,761.

Until we are consistently trading after the open (no 'sucker fades' thank you very much), in the 9,100 range? I don't see a confirmation on the bottom rally. Mind you, if we do trade well into that range? Yes, I may take a nibble into the stock market.

We may have promises of infrastructure growth and development? We may have promises of expanded Federal Reserve powers? The auto companies may survive? They may talk about further interest rate cuts?

But we're not out of the woods yet Mr. Scott.

* * *

Note: 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, and tolerance for risk.

Airelon's Podcast at Podbean! (Wednesday Recap: The Violently Sick Episode)

Check it out! Airelon is on Podbean, and I now have my very first podcast up and ready to go. Go ahead and subscribe!

(Podcast Included. If you're seeing this from Email subscription and cannot see the Podcast? Click on the title link in the Email to find the embedded podcast ...)



Click here to download this podcast.

I'm still figuring out all of the niceties of podcasting, and promise to try to improve ...

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Note: 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, and tolerance for risk.

Tuesday, December 9, 2008

Ugh ...

Suddenly ...

violently ....

ill.

I'll spare you the gory details. I'll try to make it back to the land of the living by tomorrow. I have had a remake video ready to upload, but seriously? I haven't even had the strength to sit up here at the computer ...

Saturday, December 6, 2008

Week In Review: Deflation and the Importance of Education

"Education is dangerous - every educated person is a future enemy." - Hermann Goering

Ok, with the above quotation, people could accuse me of invoking Godwins law. But I mean ... come on. Seriously. I couldn't believe some of the pm's and emails I received through the 'contact me' button after the "Fiat Currency" and "Trader Mindset" vlogs. Much of what I am trying to accomplish with this 'blogged vlog'? Has to do with education. Don't blame me for simply trying to educate others. I am presenting all sides of the argument. Is that really so awful?

The better educated the citizens of a given economy are, the stronger the economy becomes. The stronger the economy of a given nation is, the better my life becomes.

I'm just here to fill in 'all' of the pieces, and talk about what Paul Harvey called: "The Rest of the Story"

Which I discuss in the following vlog ...

(Video Included. If you're seeing this from Email subscription? Click on the Title Link in the Email to View the Video ...)



Please stay safe, and please have the mindset of a trader ...

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Note: 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, and tolerance for risk.

Friday, December 5, 2008

The Blog TV Show ...

We had a really nice crowd at the BlogTV show this week. We went for a full two hours, from 5:00 pm to 7:00 pm.

One topic came up, and I'm really glad it did.

When should a person go from paper-trading a demo account? To real trading? I talked about that ...


No Title- Broadcast your self LIVE

See you tomorrow at the "Week in Review"

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Note: 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, and tolerance for risk.

Thursday, December 4, 2008

Trading For A Living ... (VIDEO)

"Peter was the only guy in the camp he had ever wanted for his friend, the only guy he needed. So he decided to teach him the facts of life. It's going to be tough, Peter boy, and it may hurt you a lot, but I'm going to teach you if I have to break you. You're going to survive and you're going to be my partner." - Colonel King, King Rat by James Clavell

When you reach the end of a YouTube video, suggestions are provided to as to other videos with similar topics. Usually, these suggestions are pulled from similarities found in the 'tags' of each video. Tags are the 'labeling identifiers' that users can attach to their video such as: 'economy', 'bailout', 'AIG', etc.

Some time ago I proceeded to click on one of the suggestions. I found myself quickly tumbling down the down the rabbit hole, careening from video to video, listening to scores of individuals discuss the economic crisis; and how it directly affects their lives. In each video, the person was either grasping for practical solutions, or espousing what they believed were solutions.

I ran across one fellow who seemed to know what he was talking about during the beginning of his video. Yet after 3 minutes? His solution was to create what he thought could exist as a 'true' communist state. So much for self-reliance.

I found someone else, who was basically ... well ... they were crying about losing their job. Now I can sympathize with the emotion of losing your place of employment. But what did this sad state of affairs drive this person to, in terms of a solution? What was the first thought that came to their mind? Kill anyone who makes over $250,000 a year, and take their money. I'm completely serious. And so were they.

I found someone else, who was preaching class warfare from what appeared to be his basement.

People are desperate for practical, workable solutions to their immediate problems. It never ceases to amaze me how many people expect to be handed a job by someone; and then call this 'self-reliance'. I truly believe that many people do not know 'how' to become self-reliant. How to procure their own food, their own livelihood, their own means of living.

When I am asked by someone how to achieve self-reliance? I always answer in the same manner: Become a trader.

I discuss what I mean by that statement in the the following vlog entry ...

(Video Included. If you're seeing this from Email subscription? Click on this link to View the Video ...)



Please. For the love of all that's holy. In the coming recession?

Be a trader.

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Note: 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, and tolerance for risk.

Wednesday, December 3, 2008

Airelon's Thoughts Regarding Fiat Currency ...

"The main problem that arises on the fiat system is that of human nature" - Myself

On Thursday, October 9th I had a blog entry regarding "Airelon's Thoughts Regarding the Gold Standard".

Since that time? I've received so many comments, emails and private messages, that I've almost forced myself into defending the fiat currency system.

Which I don't want to do. Not at all. Anyone who has listened to my thoughts for any length of time, knows that I do not want to advocate, or defend any economic school of thought, nor do I want to defend any one system. I just try to point to 'what is'. To determine 'what is', I have to know each theory accurately. I have to know the drawbacks and the advantages. Thus, I can walk into any trade, better informed. Any investment, better informed.

And the fact of the matter is that there are very real problems with the fiat currency system.

So what are my problems and thoughts with the fiat system? Is the trend change we've seen on the US Dollar based on deleveraging? Or mob psychology? We discuss that in the following vlog ...

(Video Included. If you're seeing this from Email subscription? Click on the Title Link in the Email to View the Video ...)



So basically? In as few points as possible, why hasn't the U.S. Dollar devalued with the increase in money supply?

1) De-leveraging: People exiting their equity and over-leveraged derivative positions. When they exit those positions? They need a currency. That massive rush has been to the U.S. Dollar. That also leads to point number two ...

2) The Fed gave money to the banks at a very reasonable rate: But the Banks 'hoarded' that money. They didn't loan out money to others at a slightly higher rate. They just stopped loaning. Basically, it's supply and demand. The supply increased? Yes. But the demand rose, and the actual supply? Never made it's way to the consumer. It went as far as the banks, and stopped there. Some of that has simply disappeared to balancing ( de-leveraging ) over-leveraged derivative positions.

3) Macro-economic liquidity: People need a liquid means of exchange on a day to day basis. This goes to the Lucas Critique that I mentioned in the video. Everything starts with what is most sagacious and practical for your average guy on the street exchange money he or she earned from his labour for goods he or she wishes to purchase. This also relates to the psychology of the entire economy.

4) No crisis of confidence: Due to the above factors? People have watched the U.S. Dollar soar to new heights. Higher than it's been since April of 2006.

5) Wages have not increased: Instead, unemployment has increased. Therefore, producers will not receive more money from the consumer. Therefore, the producers begin to lower their prices. Economics 101. Thus, the fall in prices we've all witnessed among the commodities.

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Note: 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, and tolerance for risk.

Tuesday, December 2, 2008

Airelon's Thoughts: December 2008 (Should, Are and Watching)

Challenge Accounts:

Investing Account Balance: $408.69
Stock / Futures Trading Balance: $974.62
Online Savings Balance: $122.97

We arrive at a new month ... December 2008. It's sort of been a habit of mine, that I put together some things that I'll be watching for the next month. So here it is ... Airelon's thoughts for December, 2008.

I have three 'blips on the radar'. What "Should" be happenings. Where we actually "are" economically speaking. And what I am "Watching" in the markets ...

(Video Included. If you're seeing this from Email subscription? Click on the Title Link in the Email to View the Video ...)



* * *

Current Challenge Project Account Balances and
Money Management Numbers:

Investing Account Balance: $408.69
Stock / Futures Trading Balance: $974.62
Online Savings Balance: $122.97

Total Trades: 7
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $55.18
Average Loss: $74.27
Accuracy Rate: 28.57%
Average Reward: $175.34
Risk : Reward Ratio: 1 : 2.1
Trading Money Gain / (Loss): Up + $7.33

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, and tolerance for risk.

Monday, December 1, 2008

The Low Funded Challenge Account Project: December 2008

Novembers Challenge Account Balances:

Investing Account Balance: $366.54
Stock / Futures Trading Balance: $964.62
Online Savings Balance: $92.97

The original video explanation of the Challenge Project is to be found here.

A video summary of my decisions for this month is to be found at the end of this blog entry.

Back in October of 2007, I created sub-accounts from my main brokerages; as a main feature to this blog, and in November of 2007, I began the Challenge Project. 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, or if starting up again because his or her account account has been wiped out. These are actual sub-accounts at my brokerages that I own, and I will look to for growth. I will announce actual trades and investments that I perform in them, and the money management rationals and reasons for my decisions as a means to educate others. 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.

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 later added a small ING Savings account that has been built up to a balance of $92.97. Due to the initial investment, I once termed this the "$500 Challenge". Since we now have much more in these accounts than $500 at the end of November, I will term this the "Low-Funded Challenge Project" instead of the "$500 Challenge". At times I will refer to them simply as the "Challenge Project" accounts.

I also had three rules for the "Challenge Project" 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 December.

Rules for the Challenge Account:

1) The initial investment is $500.00, to be split amongst the accounts. After creating the accounts in October of 2007, we had our initial deposited transferred in November 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. This account is the 'trading' account, for stocks, ETF's, and futures options. Therefore, rule #1 is always complete.

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. Last month we deposited $60.00 to the Investing Account to start rebuilding cash balances, $0.00 to the Trading account, and $40.00 to the Savings account.

We won't invest again in the stock market until two things happen. 1) We have more cash to properly position our next purchase and 2) Market conditions improve, and the economic data prices itself into the market.

I'm probably not going to be engaging in any trades for the Challenge project in December, as 1) The Account Balance is still very, very low, and therefore 2) the primary job is to get the account equity bumped up.

That works out well. Why?

Well, look again to the growth strategy we've had all along. If you note my project strategy video (located here), for a long time, we were looking to get past the first step in this phase of the project. Thus, we were looking for the trading account to have an equity greater than $900.00. We've accomplished this, as we now have a balance of $964.62 at the end of November. The next goal is to get the account past $1,100.00. But what have I said all along?

That the goal right is not to actively trade that account. It's to get the account equity balance bumped up. I want to say that again. The goal right now, isn't to primarily trade that account. It's to get the account equity balance bumped up. So this works out well.

For December, 2008, I decided to send $30.00 to the ING Account, $60.00 to the Investment Account, and $10.00 to the Trading Account.

3) I'll be using regular investment and trade vehicles. Bonds. Stocks. ETF's. Futures Options. I want to wait and bump up the equity, so I probably (probably) will not trade anything in the Challenge Trading account in December. There isn't enough to purchase another stock in the Investing account for December. So it's going to be a 'quiet' month.

We'll get there.

(Here's the video recap. If you're seeing this from Email subscription? Click on the Title Link in the Email to View the Video ...)



December Balances after Deposit from Rule #2

Investing Account Balance: $440.00 (This will fluctuate with the BAC and KO stock)
Stock / Futures Trading Balance: $974.62
Online Savings Balance: $122.97

* * *

Current Challenge Project Account Balances and
Money Management Numbers:

Total Trades: 7
Largest Inter-trade Drawdown: $86.51
Consecutive Losing Trades (Drawdown): 2
Average Drawdown: $55.18
Average Loss: $74.27
Accuracy Rate: 28.57%
Average Reward: $175.34
Risk : Reward Ratio: 1 : 2.1
Trading Money Gain / (Loss): Up + $7.33

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, and tolerance for risk.

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