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Monday, April 12, 2010

Monday Challenge Project Summary: April 12, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $831.30
Trading "Sister" Balance: $1,716.40
Interest Bearing "Sister" Balance: $400.30
Total Challenge Project Funds: $2,948.00

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.

As I had mentioned last week, the Challenge Project portfolio strategy for the 'trading account sister' at the current time 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.
At this point, we have added 9.096% of capital to the trading account this year, or about $145.00. Risking 3% of the capital would expose approximately $52.24. At first glance, it looks like I could take on a trade. And truth be told, if I see a high probability setup, I'll take it.

But I'll tell you, my strategy this quarter is to focus on building up the trading account. So I know that each week, the Challenge project 'trading sister' account will receive about $25.00. That's nearly guaranteed, and more importantly, carries zero risk. The other factor to consider, is that each winning trade, with the current strategy ... has been about $25.00.

So don't be surprised if for a week or so, I'm content to simply add funds via rule number two. Why risk money, when I know that this quarter I'll be adding guaranteed funds to the trading account?

Of course, during this quarter we will occasionally show some love to the 'savings sister' and 'investing sister' accounts. And speaking of the 'investing sister' account, on the fifth of April, the $0.44 dividend showed up for Coca-Cola in cash. So that looks like a pretty definitive answer to our question from a month or so ago. No partial shares unless the reinvestment will equal one share.

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

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $828.30
(YTD the account is up +3.65% YTD Return is about +2.376% Equities yield is approximately +9.41% in dividends and additional shares of stock)
  • 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: $205.05
-$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
$1.10 of an MCD dividend was transferred to the trading "sister" account
-This leaves $51.95 cash available
  • Additional $100.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):

Stock / Futures Trading Balance: $1,741.40
(YTD cash and equity up about 9.096 % Return on Capital is 1.15 %)
  • 2% risk tolerance gives us $34.82 to risk per trade
  • 3% risk tolerance gives us $52.24 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 99.85 % 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: $2,970.00

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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