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Tuesday, August 31, 2010

ThinkorSwim Migrates to .... ?

I try to be a compassionate guy. A 'giving' sort of guy. I try to be understanding.

Years ago (many years ago), I used to work in the Information Technology field. About the only thing when it came to the network at General Motors (GM) headquarters that I did not do, was the actual engineering work in the closets. But you name it ... running the administration, management, software testing and integration, deployment ... I did it on that network.

So I have a great deal of empathy for folks who are in the midst of an I.T. migration; such as the one that ThinkorSwim is in the middle of. It's a gigantic task.

Now, all of that being said ...

I've been in this business for 14 years. And in all of that time, I've never had a platform go 'non-functional' for two entire days. I understand that migrations are an incredible undertaking and that there are always a number unknown factors that you did not account for. But this is why you build test servers. This is why you build model offices. This is why you test, and test and retest as you expand the WAN area.

Because two days with a non-functional platform when your entire business model is providing a platform?

That's simply unacceptable.

Thankfully, I've kept my optionsXpress account during this time, and was able to use that. But what happens when I close those accounts as well according to my earlier announcement?

I tell you what ... on that front ... I'm running into a whole set of problems and risks that I haven't had to consider for a long, long time.

* * *

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 14 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, August 30, 2010

The Rumors of China's Central Bank Chief's Defection

I don't like to inundate you folks with more than one blog entry per day, but I could not resist on this little topic.

Stratfor reported on possible rumors of a defection of China's Central Bank Chief. When you read past the headline ... you quickly discover there is a shocking lack of substance in the form of facts to such a 'defection'. It is as they reported ... nothing more than rumors and denotes a political power struggle more than anything else. China's markets were down, it's economy showing problems, and the communists will use innuendo and rumor to try to expand their political power base.

Naturally, Zerohedge was quick to pick it up ... change the wording ... and yes ... you guessed it ... extrapolate this news straight out to Armageddon! How shocking! (note, that's sarchasm, considering one of their latest posts on hyperinflation read like something out of a James Bond movie, rather than this little thing we call 'reality' in the capital markets)

First of all, lest we allow previous 'scandals' and 'stories' to fade to a dim memory, we should recall that Zerohedge was also the one to report on a supposed billion dollar bond exit through carry-on luggage of an airport. Which was laughable ... in the extreme. So while discussing "shocking if true" headlines? Let's remember the caliber of such stories.

Second, I would like to know how any bond investor anywhere is in any sort of trouble with anyone? Since 2009, bond investors have looked like geniuses. Professor Pinch (worth a follow on twitter) came up with a possibility 10:1 leverage pyramiding on each successive maturity. It'd be stupid in the extreme for any Central Bank Chief to do such a thing, but in the interests of fairness, it'd be possible.

As I said, bond investors have looked like geniuses since 2009. Of course, when the bond market turns around, it can get very ugly, very fast. You haven't seen 'getting your face ripped off' until you see bond investors start to lose money. But that's all beside the point. To say today that a bond investor is in trouble ... is silly.

Some may wish to file this story under "shocking if true". I would file it under "fear mongering". I find it equally as suspicious that such a story "breaks" after this monsterus rise in bonds (falling yield) at the end of the typical August rally, while China is undergoing a political power struggle.

Those more suspicious than myself may wish to file this under "red herring".

Fear mongering leads to sensational headlines that skew you towards emotional decision making. Remember ... fear mongers can cloak their wording and hide behind insubstantial innuendo. Unfortunately, all too often, the result is that people who read such stories end up making really dumb decisions in regards to their investment choices.

* * *

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 14 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 Challenge Project Summary: August 30, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $852.72
Trading "Sister" Balance: $2,019.63
Side-pocket Savings "Sister" Balance: $500.30

Total Challenge Project Funds: $3,372.65


Introduction:
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 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. We split up Rule No. 2, into weekly segments; or $25.00 a week. As I mentioned on August 10th, I am in the processing of liquidating my own personal accounts, and will soon be trading this 'Challenge Project', full time.

For this week, the $25.00 weekly deposit is not being made. We have exhausted Rule No. two of the Challenge Project for the month of August, 2010.

That's right. We've exhausted the $100.00 from Rule No. two this month. But I thought we could review the Challenge Project. I thought I could focus on examining each account from the standpoint of where I would like that account to be, once all of my personal accounts are finally liquidated and I'm ready to only trade the Challenge Project for my main trading vehicle.

Investing Account:

First of all, I need to say that now, as of August 30th, 2010 ... the Challenge Project accounts that comprise my dividend investing accounts? Comprise the complete total of my dividend bearing stock holdings. That's right ... I've completed the liquidation of all other accounts, and as of today, the cash is en route from those accounts. No more DTE Energy (DTE), Taiwan Semiconductor (TSM), McDonalds (MCD) or any of the others.

Yeah ... it's pretty exciting, I have to admit.

So what's the next priority for Dan when it comes to dividend investing?

Cassshhhhhh.

I've already talked about this. This account is in serious need of capital. I'm not overly concerned ... yet. I probably won't be ready to start actively trade these accounts for several months, so I have some time (in fact, the time needed to get the Challenge Project 'in gear' is directly related to the next surprise I have coming).

If I wanted to, I could continue to use rule no. two to continue to bump up the cash amount of this account. So from that standpoint? As I said early, I'm not overly concerned.

For each deposit I make to this account, I will also also be increasing the amount that is reserved to dollar cost average existing positions.

Trading Account:
Oh ... so ... close.

I would be happy to start trading this account with about $2,400.00 (With rule no. two as a heavy backup). I'm getting there. I wouldn't even mind a trade or two in the meantime.

I view this account as in the best shape of the three.

Sidepocket Account:
The main use of the account at this stage of the game is a side-pocket amount. As such, when I begin trading the Challenge Project full time, I would like to be able to withstand 3 losing trades in a row. That's my maximum consecutive losses thus far this year. So that's what, having about $200.00 in the slush-fund? Which would mean that I would need another $300.00 in this account.



Here are the new balances for each of the Challenge Project accounts as they exist today ...

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $852.23
(YTD the account is +6.70% YTD Return is about +2.235% Continuing Yield is approximately +6.96% in cash dividends and additional shares of stock)
  • 6.2367 shares of KO (DRIP is on for 4.2367 shares)
  • 5.13 shares of JNJ (DRIP is on for 3.13 shares)
  • Cash: $206.49
-$4.00 of this cash I reserve to D.C.A. KO
-$14.00 of this cash I reserve to D.C.A. JNJ
-This leaves $188.49 cash available
  • Additional $125.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):


Stock / Futures Trading Balance: $2,019.63
( YTD cash contributions, equity and return up about 26.53 % )
  • 2% risk tolerance gives us $40.39 'at risk' levels
  • 3% risk tolerance gives us $60.58 'at risk' levels
  • Additional $125.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Side-Pocket Balance: $500.30
(YTD cash equity up about 149.8 % Return on Capital is 0 %)
  • $125.00 for a Slush fund / Drawdown Kill Switch fund
  • $250.30 for a Base Savings
  • $125.00 for Emergency Savings
Savings Side-Pocket Account Balance Since Inception:
(Can Be Enlarged)


Total $500 Challenge Project Balance: $3,372.16

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



* * *

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 14 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.

Sunday, August 29, 2010

Week in Review: Hedging and Housing (PODCAST)

"Love your neighbour, yet pull not down your hedge." - Benjamin Franklin / English proverb

Welcome to the Week in Week in Review podcast!

Last week, I discussed hedges, and how to weight hedges. In this Week in Review podcast, I discuss hedging a bit further, as well as the housing numbers, the credit markets and how they relate to the current economic outlook, as well as future thoughts and plans for this blog ...

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry ...)




Click here to download this 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 14 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, August 27, 2010

Johnson & Johnson (JNJ) Hedge

I'm not sure if you saw my comments in the twitter stream, but I personally think that all larger Johnson & Johnson (JNJ) positions should be hedged, a small one, based off of the strategy that I mentioned on July 22nd, 2010. You could pick up a JNJ October 57.50 Put this morning for only 1.64 ($164.00 plus commissions per option).

Edit: I knew as soon as I knew it was time to pull the trigger, the market would rally on me. Regardless, the insurance policy is there, and it's a small premium to pay. And no, this is not for the Challenge Project. As I mentioned, this is a follow up to my comments on July 22nd, 2010.

* *

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 14 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, August 26, 2010

Investing Series: Hedging and Weighting (VIDEO)

"Precaution is better than cure." - Johann Wolfgang von Goethe

Sometimes, the best way to explain a topic, is to receive a question about that topic. Or a series of questions about a topic.

And as I have been hedging quite a bit lately, I've received quite a number of questions regarding hedges. I wanted to highlight a series of questions I received from Sebastian that encapsulates the best questions that explain the hedging process ... at least as I approach it.

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



* * *

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 14 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, August 23, 2010

Monday Challenge Project Summary: August 23, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $852.37
Trading "Sister" Balance: $2,019.63
Side-pocket Savings "Sister" Balance: $475.30

Total Challenge Project Funds: $3,347.30


Introduction:
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 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. We split up Rule No. 2, into weekly segments; or $25.00 a week. As I mentioned on August 10th, I am in the processing of liquidating my own personal accounts, and will soon be trading this 'Challenge Project', full time.

For this week, the $25.00 weekly deposit is being transferred to the Challenge Project SAVINGS SIDE-POCKET Account.

As I have mentioned before, the Challenge Project is approaching a stage where I feel the 'foundation' is almost complete.

But something that will be needed for some time, is to apply rule no. two towards the savings 'sidepocket sister' account. Why?

Remember, I never approach the markets with the mindset, asking the question of "How much money can I possibly make?" I approach the markets with the mindset of controlling my risk. And part of controlling my risk, is making sure that I always have plenty of 'dry tinder' as it were, in the form of 'tier' capital. One of the means that I make sure that I have plenty of capital, is through having a "savings side-pocket" fund. Or as I sometimes refer to it, as my 'savings sister' account, from my 'three sisters' portfolio management system.

And at the moment, the Challenge Project 'savings sister' account doesn't have 'plenty' of 'dry tinder'. It has some. A bit. With this weeks deposit, if we saw a large downturn in the equities market, I could transfer $125.00 towards the investing account, and have that capital replenished in my side-pocket account within 5 weeks time. But I want more.

So for this week, we'll apply rule no. two towards the side-pocket account.

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

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $852.72
(YTD the account is +6.706% YTD Return is about +2.235% Continuing Yield is approximately +6.96% in cash dividends and additional shares of stock)
  • 6.2367 shares of KO (DRIP is on for 4.2367 shares)
  • 5.13 shares of JNJ (DRIP is on for 3.13 shares)
  • Cash: $206.49
-$4.00 of this cash I reserve to D.C.A. KO
-$14.00 of this cash I reserve to D.C.A. JNJ
-This leaves $188.49 cash available
  • Additional $125.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):


Stock / Futures Trading Balance: $2,019.63
( YTD cash contributions, equity and return up about 26.53 % )
  • 2% risk tolerance gives us $40.39 'at risk' levels
  • 3% risk tolerance gives us $60.58 'at risk' levels
  • Additional $125.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Side-Pocket Balance: $500.30
(YTD cash equity up about 149.8 % Return on Capital is 0 %)
  • $125.00 for a Slush fund / Drawdown Kill Switch fund
  • $250.30 for a Base Savings
  • $125.00 for Emergency Savings
Savings Side-Pocket Account Balance Since Inception:
(Can Be Enlarged)


Total $500 Challenge Project Balance: $3,372.65

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


We'll be discussing the Challenge Project again soon enough ...

* * *

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 14 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, August 21, 2010

Week in Review: Flexibility over Prediction (PODCAST)

"Try to find situations and scenarios where you win regardless" - Personal Mantra

Welcome to the Week in Week in Review podcast!

Yeah, I'm late with this podcast.

Yesterday a friend stopped by, and we had a great discussion on the markets. As a matter of fact, he helped me refocus my efforts here at this blog on keeping my statements geared for the newcomer. After that, we had friends of ours, Missionaries actually ... in from Bangkok Thailand, and we spent all afternoon watching a presentation they gave at our congregation. After that, we spent some time together with them.

But finally ... it's here! The week in review podcast ...

I discuss my thoughts regarding equities, as well as my thoughts regarding the new CFTC rules in the derivatives that will soon take effect, as well as a review of the credit markets.

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry ...)




Click here to download this 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 14 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, August 20, 2010

Hot T.V. Time Machine ...

Yesterday was rather annoying.

My land-line and internet connection both went down all day. No checking the markets through my terminals. No checking on the news via the net. So I traveled back in time about 12 years.

I instead had to monitor the markets the way I did in 1998. Via Bloomberg and my cell phone. As I said, it's something I haven't had to do for a long time.

9:54 AM
Regardless, the markets moved ahead. Although I did watch Taiwan Semiconductor (TSM) trip below my alert yesterday, I decided to hold off on selling it. This morning it's up .12 cents, so I may be able to jump out of that position with less of a loss than I would have taken yesterday. I've pulled stop up a few pennies to $9.65. This is the one stock that I have that I can't see getting out of, without taking a loss. But taking loss is part of the business.

As far as DTE Energy (DTE) ... this is one I dumped out of this morning, and took my profits there.

McDonalds (MCD) ... I've decided to pull up my profit stop there just a bit, up to $71.82 to lock in more profits. General Mills (GIS) I've liquidated at $34.95 for just a little under break even, and I've completely liquidated the last of my Frontline Ltd. (FRO) stock.

With a drop below $55.00, I may take my profit on Coca-Cola (KO) as well, though I will leave that stock in the Challenge Project. I've pulled up my stops on Johnson & Johnson (JNJ) to $57.71, and my stop on Procter & Gamble (PG) to $59.46.

* * *

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 14 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, August 18, 2010

More "Lines in the Sand" ...

This entry is a continuation from yesterdays entry in regards not only the various dividend stocks I own, but where I plan to take my profits off the table in my own personal accounts, from the 'surprise' that I mentioned on August 10th, 2010. Yesterday I discussed Frontline Ltd (FRO), DTE Energy (DTE) and Shipping Finance Ltd (SFL).

The first stock to discuss today? Taiwan Semiconductor (TSM). This one I originally picked up at $11.04, and have averaged down since, and reinvested all of the dividends into more shares.

Taiwan Semiconductor (TSM) - Daily Chart
(Can be Enlarged):


I'm not really looking forward to dumping this stock if it sinks below $9.62, because this one would represent an actual loss. Not a large loss, but a loss all the same. If we get a rally up to $10.50, I'd be much more comfortable.

The next stock in the list is McDonalds (MCD). Yes, as long time blog readers know, although I sold most of my McDonalds off at something like $71.00, I still have a little bit (this is actually smallest position I have in my personal accounts) left from when I originally entered this stock at the $59.00 region.

McDonalds (MCD) - Daily Chart
(Can be Enlarged):

So at this point, my profit stop is around $71.04. As I've mentioned, this is adjustable. If McDonalds continues to gain ground, then my profit stop will float up along with it. This is known as 'trailing your stop' if you are new.

Now, let's proceed to some stocks that are held in the Challenge Project. Coca-Cola (KO). I obviously won't be selling the Challenge Project stock, but I do need to talk about selling it for other personal accounts that I originally bought in at around the $53.00 region.

Coca-Cola (KO) - Daily Chart
(Can be Enlarged):

The "profit stop" point on this stock is at $55.08. Again, I'll be keeping it in the Challenge Project accounts however. The same holds true for Johnson & Johnson (JNJ) which I originally bought in at around the $59.00 region, and have averaged down a few times ...

Johnson & Johnson (JNJ) - Daily Chart
(Can be Enlarged):


Here, I'd exit at about break even if I had to sell at $56.96
since I averaged down during the 2009 slide. Regardless, $56.96 my current 'liquidation point' for personal accounts.

Next, comes Procter & Gamble (PG), originally entered at $61.16. The stop as it stands now for personal accounts would take me out with a small loss at $59.11

Procter & Gamble (PG) - Daily Chart
(Can be Enlarged):


And then General Mills (GIS) originally entered at $70.30 Remember that this stock has gone through a 2:1 stock split, so it's actually up a bit more that what it would read from some charts (So that'd be an entry of $35.15. The market is up by a few cents and currently closed at $35.38). The stop here is at $33.35, but I'd be willing to pull this one up very quickly on the slightest hint that this thing won't clear resistance at $36.00; so that an exit can be made profitably.

General Mills (GIS) - Daily Chart
(Can be Enlarged):


* * *

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 14 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, August 17, 2010

Drawing a Line in the Sand

As I have mentioned on August 10th, I am liquidating my other personal accounts, and will soon be investing and trading the "Challenge Project" accounts full time. In the interim, as I mentioned, I have a few stocks out there. They've been silently DRIP accumulating more shares. At other times, they've paid me straight cash.

I still have some Frontline Ltd (FRO) left. So how do I take the money on the last of it? I draw a line in the sand ...

Frontline Ltd (FRO) - Daily Chart
(Can be Enlarged):

$28.59. That's where I would consider dumping out of this last little bit of Frontline Ltd (FRO). But as I described in the entry in which I discussed exiting positions? I will adjust this 'line in the sand' upwards as I continue to gain with Frontline Ltd (FRO) and make more money. This is known as 'trailing your stop' if you are new.

Let's continue to move on, and discuss other stocks I am looking to take my money on ...

DTE Energy (DTE) - Daily Chart
(Can be Enlarged):


I love this company. They provide the electricity as a utility for my home. And they know how to run a company well, as well as safely. Natural Gas, Wind farms, Nuclear power (The best run and safest nuclear plant in the country as a matter of fact), Clean coal, you name it, they own it, run it profitably, and also spend quite a bit in making sure the power is as clean as it can be. As a matter of fact, when the government had enacted various safety standards on power plants, DTE Energy was not impacted at all.

They had made the changes long before.

But, that's all besides the point. DTE Energy (DTE) has made me a fair bit of money. Unlike Frontline Ltd. (FRO), this is not a smaller position. It's easily my largest personal position, that I originally had bought in at around the $40.00 region a few years back, and have had quite a few averaged purchases since. So I'm up quite a bit, and I want to protect those profits.

We've begun to rally, and at the current time, I'll close out of this position at $45.51. That's my 'line in the sand' for DTE Energy (DTE), which I will 'trail up' as time progresses.

Let's move on to a stock that always makes me smile ...

Shipping Finance Ltd. (SFL) - Daily Chart
(Can be Enlarged):

The reason Shipping Finance Ltd (SFL) always makes me smile ... is that it cost me absolutely nothing to acquire it. It was spunoff to me as part of a stock dividend payment from owning Frontline Ltd (FRO), so I instantly had a 1,600% gain when I acquired it. I immediately turned on the DRIP for this stock, and have been reinvesting about 90% of the dividends paid in more shares of stock. In addition, I have averaged in at key points throughout the years.

At this point? I have set an alert of $18.14. as my 'line in the sand' From that point on the daily chart, we have begun to rally. As with the other stocks, I will 'trail' this stop.

There are a few other stocks I have. I will discuss them in tomorrows entry ...

* * *

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 14 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, August 16, 2010

Monday Challenge Project Summary: August 16, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $845.73
Trading "Sister" Balance: $2,019.63
Interest Bearing "Sister" Balance: $475.30

Total Challenge Project Funds: $3,340.66


Introduction:
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 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. We split up Rule No. 2, into weekly segments; or $25.00 a week. As I mentioned on August 10th, I am in the processing of liquidating my own personal accounts, and will soon be trading this 'Challenge Project', full time.

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

At this point, the investing 'sister' account is still short on cash. This is the weakest portion of the Challenge Project at the current time, and the portion of the 'foundation' that still needs a bit of tweeking. That would naturally mean that I would want to focus on applying rule number two towards the dividend investing account. Thus the reason for this weeks deposit to that account.

However, I do not expect that I will continually be sending cash towards the dividend investing 'sister' account, despite it's need.

Because I do not expect an overly large downturn in the equities market. I may be wrong. The Fed could be forced to raise interest rates, which would cause a big downturn in the equities market which would force me to apply rule number two towards the dividend investing 'sister' account, as well as possibly use some of the 'side-pocket sister' account. I have the cash available to make those sort of maneuvers.

But at the current time, I am of the mindset that I will be peppering deposits between all three of my 'sister' accounts over the course of the next few months, as I build up to trading this 'book' full-time.

For now, here are the new balances for each of the Challenge Project accounts ...

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $852.37
(YTD the account is +6.662% YTD Return is about +2.231% Continuing Yield is approximately +6.96% in cash dividends and additional shares of stock)
  • 6.2367 shares of KO (DRIP is on for 4.2367 shares)
  • 5.13 shares of JNJ (DRIP is on for 3.13 shares)
  • Cash: $206.49
-$4.00 of this cash I reserve to D.C.A. KO
-$14.00 of this cash I reserve to D.C.A. JNJ
-This leaves $188.49 cash available
  • Additional $118.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):


Stock / Futures Trading Balance: $2,019.63
( YTD cash contributions, equity and return up about 26.53 % )
  • 2% risk tolerance gives us $40.39 'at risk' levels
  • 3% risk tolerance gives us $60.58 'at risk' levels
  • Additional $118.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Balance: $475.30
(YTD cash equity up about 137.3 % Return on Capital is 0 %)
  • $118.00 for a Slush fund / Drawdown Kill Switch fund
  • $239.30 for a Base Savings
  • $118.00 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)


Total $500 Challenge Project Balance: $3,347.30

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


We'll be discussing the Challenge Project again soon enough ...

* * *

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 14 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, August 14, 2010

Week in Review: Capital Markets Review and Further Discussion on the "Surprise" for the Challenge Project (PODCAST)

"A mere lover of silver will not be satisfied with silver, neither any lover of wealth with income. This too is vanity" - Ecclesiastes 5:8

Welcome to the Week in Week in Review podcast!

After the weekly review of the capital markets that takes about 22 minutes, I want to address some of the comments and questions regarding the "surprise" that I launched on everyone earlier this week ...

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry ...)




Click here to download this 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 14 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, August 13, 2010

Nice Surprise ... Where did you go?

Sorry for the absence from blogging this last week. I was actually planning on having a 'follow up' entry that answered a lot of questions and comments in regards to the 'surprise', but I've been having camera problems. I think I'll actually be purchasing a newer HD webcam pretty soon, so expect the entries to continue soon enough ...

Tuesday, August 10, 2010

Surprise No. One and the "Challenge Project" (VIDEO)

Current $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $845.73
Trading "Sister" Balance: $2,019.63
Side-pocket "Sister" Balance: $475.30
Total Challenge Project Funds: $3,340.66

Hi.

My name is Dan. I'm a trader, and an investor.

Some time ago, I began a "Low Funded Challenge Project". It is basically a demonstration of a model that anyone could at least follow along with on a weekly basis here on this blog. I usually put up an entry regarding this "Challenge Project" once a week, on Mondays. 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.

I've discussed my reasoning in the past as to why I feel it's important to do such a low funded 'passion project'.

But I've come to feel that there is a problem with the Challenge Project.

The problem, is that they are 'sub-accounts' that I have ...

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



Ok ... so why do I call this surprise no. one? Because there is another surprise on the way. For this next surprise, you'll have to wait a few more months.

* * *

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 14 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, August 9, 2010

Monday Challenge Project Summary: August 9, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $823.19
Trading "Sister" Balance: $1,994.63
Interest Bearing "Sister" Balance: $475.30

Total Challenge Project Funds: $3,293.12


Introduction:
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. We 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.

We have crossed the $2,000.00 equity level in the trading account. When it comes to the trading account, I want to comfortably cross over this equity level before I begin to think about another trade.

At the same time that both stocks that are being held in the dividend bearing account are enjoying a nice rally. As noted below, I have also turned the DRIP back on for the Johnson & Johnson (JNJ) stock for 3.13 shares in the Sharebuilder account now that this rally has taken place.

So ... what about this "surprise" that I've talked about revealing? Well ... you only have to wait one more day until I reveal the first portion of this surprise. I will talk about that in tomorrows entry. For now, here are the new balances for each of the Challenge Project accounts ...

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $843.01
(YTD the account is +5.491% YTD Return is about +4.194% Continuing Yield is approximately +6.96% in cash dividends and additional shares of stock)
  • 6.2367 shares of KO (DRIP is on for 4.2367 shares)
  • 5.13 shares of JNJ (DRIP is on for 3.13 shares)
  • Cash: $181.49
-$3.73 of this cash I reserve to D.C.A. KO
-$13.86 of this cash I reserve to D.C.A. JNJ
-This leaves $163.90 cash available
  • Additional $118.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):


Stock / Futures Trading Balance: $2,019.63
( YTD cash contributions, equity and return up about 26.53 % )
  • 2% risk tolerance gives us $40.39 'at risk' levels
  • 3% risk tolerance gives us $60.58 'at risk' levels
  • Additional $118.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Balance: $475.30
(YTD cash equity up about 137.3 % Return on Capital is 0 %)
  • $118.00 for a Slush fund / Drawdown Kill Switch fund
  • $239.30 for a Base Savings
  • $118.00 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)


Total $500 Challenge Project Balance: $3,337.11

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


We'll be discussing the Challenge Project again tomorrow ...

* * *

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 14 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, August 7, 2010

Week in Review: Dan IS Wrong (PODCAST)

"The professional trader is not concerned with proving his thesis correct in the markets. Professional traders are wrong all the time. The trick, is knowing ... how ... to be wrong." - Personal Mantra

Welcome to the Week in Week in Review podcast!

As I review the capital markets this week, I want to talk about incorrect market ideas I've had. Because too often, new traders are taught and given the impression that profitable traders are traders who are always 'correct' in their market calls.

That is simply not the case, as I hope to relate in the following podcast. I also discuss inflation and deflation towards the end of podcast ...

(Podcast Included. If you're seeing this entry elsewhere and cannot play the podcast? Click this link to go to the exact podcast entry ...)




Click here to download this podcast.

Ugh, around 26 minutes, it gets a little rough for about one minute twenty seconds. It clears up after that. I think it was the podbean upload ...

* * *

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 14 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, August 4, 2010

Airelon's Trading Methodology (Series): Let the Market Confirm the Implied Probability (VIDEO)

"Allow the market to confirm your edge" - Personal Axiom

I'm asked all of the time: "How do you trade?". And when asked, I freely share exactly how I trade. I've had videos here on the daily blog that reviews my own trades throughout the week, and discusses exactly how I trade. But the question will usually come up again and again.

I have discovered that it's best to put together "playlist series" that discuss topics that I receive inquires on a frequent basis.

So here I've begun a new playlist, or series, that discusses my own trading style and methodology. We've discussed a bit regarding the 'psychology' behind my trading methodology and money management, as well as how I approach trading each week, but looking to my edge first, and how I construct that edge looking for situations where all of those aspects agree with one another.

Today, I want to talk a little bit about the moving forward into the trade by discussing the markets reaction to that edge ...

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



* * *

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 14 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, August 2, 2010

Monday Challenge Project Summary: August 2, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $818.59
Trading "Sister" Balance: $1,969.63
Interest Bearing "Sister" Balance: $475.30

Total Challenge Project Funds: $3,263.52


Introduction:
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. We 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.

We are within a hairsbreadth of the $2,000.00 capital level for the small Challenge trading account. There will be no trades within the trading account until rule no. two until we cross that $2,000.00 level.

I'll say it again ... a surprise is on the way that will directly affect the Challenge Project. It will affect everyone's 'regard' of this small "Challenge" of mine. Including my own.

Stay tuned ... I'll unveil the surprise next week.

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

Challenge Project Balances After Rule No. 2 Deposit:

Investing Account Balance: $823.19
(YTD the account is +3.011% YTD Return is about +1.744% Continuing Yield is approximately +6.96% in cash dividends and additional shares of stock)
  • 6.2367 shares of KO (DRIP on for 4.2367 shares)
  • 5.13 shares of JNJ (DRIP is OFF)
  • Cash: $181.49
-$3.73 of this cash I reserve to D.C.A. KO
-$13.86 of this cash I reserve to D.C.A. JNJ
-This leaves $163.90 cash available
  • Additional $118.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):


Stock / Futures Trading Balance: $1,994.63
( YTD cash contributions, equity and return up about 24.96 % )
  • 2% risk tolerance gives us $39.89 'at risk' levels
  • 3% risk tolerance gives us $59.83 'at risk' levels
  • Additional $118.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Balance: $475.30
(YTD cash equity up about 137.3 % Return on Capital is 0 %)
  • $118.00 for a Slush fund / Drawdown Kill Switch fund
  • $239.30 for a Base Savings
  • $118.00 for Emergency Savings
Savings Account Balance Since Inception:
(Can Be Enlarged)


Total $500 Challenge Project Balance: $3,293.12

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 14 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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