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Monday, April 5, 2010

Monday Challenge Project Summary: April 5, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $821.15
Trading "Sister" Balance: $1,691.40
Interest Bearing "Sister" Balance: $400.30
Total Challenge Project Funds: $2,912.85

The original video explanation of the Challenge Project that began with $500, is to be found here. The Challenge Project is basically a demonstration of a model that anyone could at least follow along with on a weekly basis. It is my attempt without cost, to help out the 'little guy' when it comes to investing and trading by providing an example, a 'model' as it were ... as run by myself as a professional trader with real money, in sub-accounts that I own; following my own three sisters portfolio management system; albeit modified a bit to operate with low funds. From time to time, I provide snapshots of the broker statements.

Rule No. 2 of the Challenge Project states that each month, we can divvy up $100.00 as we wish between the various challenge project accounts. Some time ago I stated that I may split up Rule No. 2, into weekly segments; or $25.00 a week.

For this week, the $25.00 weekly deposit is being transferred to the Challenge Project TRADING Account.

And thus we begin this second quarter of 2010 by building up the capital in the 'trading sister' account. As of today's date, capital is up 7.52% in that account for the year.

Now I could sit here and say: "I'm not going to take on a trade until the 'trading sister's' account is up by X%." I could limit myself, by saying that the next trade will occur when the capital is up to say ... 13% for the year. But I know that as soon as I put out that figure, I would get the capital up by 10%, and there would be an absolutely fantastic trade that I'd have to pass up in order to stick to my self-imposed limit. To keep to my word.

So let me put it this way ...

My goal is to get the trading account capital up by another 13% before thinking about another trade. A 13% increase in capital for this year, would mean that the account is looking at a little over $1,800.00 in trading capital. Which is still very, very tiny. Of course, if there is a trade that appears too good to pass up before that time, I'll take it. But we are not yet to a point in the 'trading sister' that we can trade the account actively. It's still within the 'tiny' phase.

So the strategy for the 'trading sister' remains ...
  • Build up the capital in the account by the application of rule no. two
  • Take a very small risk trade, only when that risk is far underneath what rule no. two has added to the account.
Remember, that the dividend reinvestment was implemented for the Coca-Cola(KO) stock that's being held at Sharebuilder; so we gained more partial shares there. As yet, the dividend has not shown up for the share held at the ThinkorSwim account. And as you can see, we've enjoyed a bit of a rally out of the stocks being held in the 'investing' sister.

Here are the new balances for each of the Challenge Project ...

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $831.30
(YTD the account is up +4.03% YTD Return is about +2.62% )
  • 5.1665 shares of KO (DRIP on for 4.1665 shares)
  • 3.1014 shares of JNJ (DRIP on)
  • 2 shares of MCD (DRIP is now OFF)
  • Cash: $204.61
  • $1.10 of an MCD dividend was transferred to the trading "sister" account
-$5.10 of this cash I reserve to D.C.A. KO
-$64.00 of this cash I reserve to D.C.A. JNJ
-$84.00 of this cash I reserve to D.C.A. MCD
-This leaves $51.51 cash available
  • Additional $100.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):

Stock / Futures Trading Balance: $1,716.40
(YTD cash and equity up about 7.52 % Return on Capital is 1.15 %)
  • 2% risk tolerance gives us $34.32 to risk per trade
  • 3% risk tolerance gives us $51.49 to risk per trade
  • Additional $100.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Balance: $400.30
(YTD cash equity up about 99.87 % Return on Capital is 0 %)
  • $100.00 for a Slush fund / Drawdown Kill Switch fund
  • $200.30 for a Base Savings
  • $100.00 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)

Total $500 Challenge Project Balance: $2,948.00

Total Challenge Account Growth Since Inception:
(Can Be Enlarged)

We'll be back to the Challenge Project next 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 over 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.


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