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Thursday, September 30, 2010

Just a Thought ...

I figure that I gave you enough yesterday to chew on with a video that was a bit longer than usual. But I wanted to offer a brief thought this afternoon ...

We have a choppy market at the top of a nice rally.

VIX is lower, but starting to head higher.

If an investor has any longer term holds in equities, I personally feel that now might be a good time to think about a strategy, and build parameters by which an index hedge would be put on.

Just saying ...

* * *

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, September 29, 2010

Airelon's Trading Methodology (Series): Exits, Recordkeeping and Metrics (VIDEO)

"The biggest mistake regarding record-keeping is not writing things down or not remembering where you wrote it down." - David Mellem

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.

We then discussed moving forward into a trade by discussing the markets reaction to the established bias. We talked about how I chart, what charting tools I use, and how I use, as well as how I use support and resistance in my trading. We discussed entrances and reading the tape; and included a few examples.

Today, I want to talk about what I do after the trade ...

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



Here is the link to the RSS feed to blip.tv's version of the playlist.

* * *

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, September 28, 2010

A New WebCam and Market Wrap Up for Mid-Day, September 28, 2010 (VIDEO)

"Progress is progress. It may not be the progress you want to see. But if it's forward movement, then it's still progress" - Personal Mantra

I really do eventually get around to things ...

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



I think the reason why the video didn't fully expand out to 16:9 aspect ratio, was due to using the old introduction and outro. I'll be remaking the introduction and outro 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.

Monday, September 27, 2010

Monday Challenge Project Summary: September 27, 2010 (VIDEO)

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $879.16
Trading "Sister" Balance: $2,069.63
Side-pocket Savings "Sister" Balance: $525.30

Total Challenge Project Funds: $3,474.09


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.

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



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

Challenge Project Balances After Rule No. 2 Deposit:

Goals for Each Account By the Time I Trade Challenge Project Full Time
  • Investing Account: More cash, will evaluate
  • Trading Account: $2,400.00
  • Savings SidePocket Account: $800.30
Investing Account Balance: $918.69
(YTD the account is +14.96% YTD Return is about +6.939% 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)
  • 5.158 shares of JNJ (DRIP is on for 3.13 shares)
  • Cash: $232.57
-$ 1.00 of this cash I reserve for a new purchase
-$ 6.00 of this cash I reserve to D.C.A. KO

-$17.00 of this cash I reserve to D.C.A. JNJ
-This leaves $208.57 cash available
  • Additional $131.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):


Stock / Futures Trading Balance: $2,069.63
( YTD cash contributions, equity and return up about 29.66 % )
  • 2% risk tolerance gives us $41.89 'at risk' levels
  • 3% risk tolerance gives us $62.83 'at risk' levels
  • Additional $131.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Side-Pocket Balance: $525.30
(YTD cash equity up about 162.3 % Return on Capital is 0 %)
  • $131.00 for a Slush fund / Drawdown Kill Switch fund
  • $263.30 for a Base Savings
  • $131.00 for Emergency Savings
Savings Side-Pocket Account Balance Since Inception:
(Can Be Enlarged)


Total $500 Challenge Project Balance: $3,513.62

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, September 25, 2010

Week in Review: Investing, Manufacturing and the Return of Inflation? (PODCAST)

"There are good traders, and bad traders. There are good investors, and there are bad investors. There are good economists, and bad economists" - Personal Mantra

Welcome to the Week in Week in Review podcast!

I did not have a podcast last weekend, so we have quite a bit to catch up on. I discuss dividend investing with specific examples, the U.S. Dollar, the state of the economy, and the ever important commodity markets with a balanced look at inflation ...

(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, September 24, 2010

Anti-Periodic Events and the Lucas Critique in Relation to Timing a Financial Crisis

We have experienced a number of financial crisis. And I'm not just speaking of the events of the last three years. I'm speaking of ... well ... events that occur with regularity since the beginning of human economies.

Naturally, when ones speak and think of a financial crisis; they wish to know how to protect themselves. Which is only natural and reasonable. After all, one of the precepts I preach more than any other when it comes to investing and trading in the capital markets is ... what?

Risk control.

So ones reasonably wish to limit their risk when it comes to a financial crisis.

Unfortunately, this leads one to the idea of trying to time when the financial crisis will manifest itself onto the capital markets. They usually do so, because they measure large broad economic indicators and metrics. They will then point to a historical precedent where an crisis manifested itself with the same measure of economic metrics.

Which I believe, and most modern economists also believe ... is a mistake.

It is possible to identify when such bubbles are forming (i.e., the lack of wealth creative mechanisms on an asset class through two point deviations, fundamental anaylsis, etc). But trying to time when exactly such bubbles will burst, or when a financial crisis will manifest itself is nearly impossible.

The reason that these crisis are so difficult to time, is due to their anti-periodic nature of such Crisis', as well as the Lucas Critique.

What do I mean?

Well, let's first take the aspect that financial crisis are 'anti-periodic' in nature. Such crisis or events do not follow a predictable pattern in time. They do not occur at regular intervals. This is why I do not put much faith in 'technical timing tools' when it comes to the eruption of these larger economic problems onto the capital markets.

I cannot tell you the number of people that got their faces ripped off by trying to short an insane tech bubble, in 2000, because they thought they had the best timing tool. You cant 'time' when a bubble is about to burst, so it's generally best to stop trying.

But why? Why do such financial events not occur according to a predictable pattern and regular intervals in time? Why?

Because of the individual, and human intelligence, and that leads me to my second point.

Some folks, unfortunately, follow very old, and very outdated economic theories that do not allow for the flexibility of human intelligence. They are still working from the standpoint of the "Theory of Adaptive Expectations". Basically, and simply put, this theory states that economies will behave in the future based on what has happened in the past. In other words, if you study all of the large economic data and metrics in the past, that will tell you what is about to happen next.

This theory and concept is very outdated, and also very wrong.

It is advantageous to study historical patterns and LEI's that provide for some amount of metrics on a large basis for individual trades. I myself am a trader who uses seasonal metrics as a type of 'edge' when trading commodity futures. But there is a large difference between using seasonal metrics as an edge in the markets for a single trade, and using historical reactions to try to predict macro-economic outcomes.

In other words, the "Theory of Adaptive Expectations" means that folks will say "Well, in the past, this occurred given this measure of economic data, so with the same input, the same will occur in the future."

This is incorrect.

Robert Lucas Jr. proved some time ago with his "Theory of Rational Expectations" that individuals make decisions all available information that is current, rather than simply looking at past data. And that these individual decisions, when they build from a base, governs macro-economic outcomes. This theory proves that you must obtain a micro-economic foundation before coming up with a broad macro-economic thoughts regarding the future.

"[The Lucas Critique] argues that it is naive to try to predict the effects of a change in economic policy entirely on the basis of relationships observed in historical data, especially highly aggregated historical data" - Robert Lucas Jr.

This has been proven repeatedly. Which is why I maintain that one of the strongest, and most important of economic indicators as of late? Is consumer loan demand. This is a measure of how individuals are behaving, as a group.

Regardless, returning to my original point ... the Lucas Critique teaches us that it is individuals who determine the outcome of macro-economic policies. Not the policy makers, nor the government. Nothing the government can do will change individual human behavior, or human decisions.

The government could offer to pay people to take loans, and if a group of individuals decides the government in question is not trustworthy, they won't take the deal. It is individuals ... not governments, that decide the outcome of economies.

Now we could sit and argue over efficient market ideals or the opposite thereof (the mention of Lucas will inevitably lead to that conversation). But that's not my point.

My point, is that it is individuals, not governments, that push a financial crisis to the world stage. This is why it is silly to try to time the eruption of a financial crisis. This is why financial crisis are anti-periodic in the first place.

* * *

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, September 22, 2010

Here Comes the Blather-panic ?

"Doubts and mistrust are the mere panic of timid imagination, which the steadfast heart will conquer, and the large mind transcend." - Hellen Keller

In case you missed my little 'shpeel' earlier this morning in the twitter stream ... allow me to expound upon my thoughts and points here.

First of all ... let's begin with the fact that the U.S. Dollar has been falling for a few months now ...

U.S. Dollar Index Futures
Daily Chart


Now, allow me to interject a secondary observation.

Personally, I've never understood why the Federal Reserve did not work harder to marry volatility / and understood seasonal pressures to 'hide' effects of their efforts at market guidance. This is much different than what occurred in 2007. I have often stated that in 2007, the Fed shared much of the blame for the inflation problem that occured due to their exacerbating the issue by 'throwing gasoline onto the fire' (pardon the pun) in the oil markets by their prime Fed rate cutting efforts during a seasonally bullish time for oil prices.

High inflation was the natural result, and long time blog readers and subscribers to the YouTube channel know that I was all about the 110 Oil call options in the futures markets.

So why did not the Fed take such well understood seasonal pressures into account when making such decisions and statements? I'm by no means saying that 'my thoughts are better'. I'm an economic and political neutral, as well as a Christian. But I've always wondered why they did not take a more serious view of seasonal pressures in the market.

But now? Now, perhaps, all of that is beginning to change.

So let's take this back to the dollar.

In brief? The dollar falling off sharply during the month of September?

It's seasonally very typical. Very typical.

It has nothing to do with their statements on Tuesday. It has nothing to do with 'investors fleeing dollars'. If you look at a 5 year seasonal average, a 15 year seasonal average, or a 30 year seasonal average, the U.S. Dollar always falls in the last half of September. In fact, a few weeks ago I was writing in my newsletter about building a bearish consensus in the U.S. Dollar, and selling any rallies. I didn't personally take advantage of that trade, as I was in some other markets (I don't trade too many markets simultaneously). But it's something I've seen coming for a while, along with this rise we've seen recently in Gold.

"Seasonally, the U.S. Dollar is very weak for the month of September, and I've been somewhat encouraged that it has held up as well as it has. However, it should be noted that the current resistance level, or region of 82.350 is being tested. We might rally from 7:00 am est this Monday towards the 82.90 region; it wouldn't surprise me. If that turns out to be the case, then I wouldn't mind taking a short trade if I see the market congest at that level" - Airelon's Market Tactics, September 13, 2010

Back to the current state of dollar.

This September's U.S. Dollar sell off usually leads to all sorts of blather-panic fun (thanks to Echo for that term, I find myself using it all of the time now) by the 'dollar will crash / hyperinflation' folks by each November. Again, this is typical each year. Which is usually when I begin to build my bullish dollar consensus about that time, if other economic conditions merit.

So to be clear ... I see no "dollar crash" as imminent with this recent sell-off. In fact, I was encouraged by some of the Fed's statments. What I see in the result of the U.S. Dollar Index is a very usual, very typical move in the capital markets. In addition, simply because Gold is rallying to new highs, does not have me concerned in regards to inflation. Again, this Gold rally is very typical for the month of September. Personally, I feel that you'd have to be exceedingly foolish to try to short Gold in September. Regardless, Gold is one of the last things I look at when it comes to inflation that affects us all. I'm much more concerned about oil, the bond markets, and grain prices. You know ... the things that really and truly affect our daily lives.

So all of my above comments are not to say that I do not have some inflationary concerns. I do. I do feel it's building. It's something I am keeping my eyes on, and trust me ... if I feel that inflation is about to become a major worry, I will talk bout it here.

But a dollar crash?

Sorry ... no.

Now, am I basing these ideas solely around the fact that this year, seasonal pressures coincide with the recent FOMC statements and rate decision?

No.

I'll also talk more in the future regarding financial events in the capital markets as they relate to non-linear anti-periodic functions.

* * *

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, September 20, 2010

Monday Challenge Project Summary: September 20, 2010 (VIDEO)

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $879.16
Trading "Sister" Balance: $2,044.63
Side-pocket Savings "Sister" Balance: $525.30

Total Challenge Project Funds: $3,449.09


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 TRADING Account.

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



Ok ... this is getting ridiculous on the audio quality. I'm going to buy a new webcam this week.

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

Challenge Project Balances After Rule No. 2 Deposit:

Goals for Each Account By the Time I Trade Challenge Project Full Time
  • Investing Account: More cash, will evaluate
  • Trading Account: $2,400.00
  • Savings SidePocket Account: $800.30
Investing Account Balance: $884.13
(YTD the account is +10.64% YTD Return is about +6.001% 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)
  • 5.158 shares of JNJ (DRIP is on for 3.13 shares)
  • Cash: $207.57
-$4.00 of this cash I reserve to D.C.A. KO
-$15.08 of this cash I reserve to D.C.A. JNJ
-This leaves $188.49 cash available
  • Additional $131.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):


Stock / Futures Trading Balance: $2,069.63
( YTD cash contributions, equity and return up about 29.66 % )
  • 2% risk tolerance gives us $41.39 'at risk' levels
  • 3% risk tolerance gives us $62.08 'at risk' levels
  • Additional $131.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Side-Pocket Balance: $525.30
(YTD cash equity up about 162.3 % Return on Capital is 0 %)
  • $131.00 for a Slush fund / Drawdown Kill Switch fund
  • $263.30 for a Base Savings
  • $131.00 for Emergency Savings
Savings Side-Pocket Account Balance Since Inception:
(Can Be Enlarged)


Total $500 Challenge Project Balance: $3,479.06

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.

Sunday, September 19, 2010

Dan is MIA again, or has he gone AWOL?

Sorry folks, but there will be no "Week in Review" this weekend. I'll explain when I see you folks on the entry for Monday ...

Friday, September 17, 2010

Airelon's Trading Methodology (Series): Two Example Trades and Thoughts on Patterns (VIDEO)

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

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. We then discussed moving forward into a trade by discussing the markets reaction to the established bias. We talked about how I chart, what charting tools I use, and how I use, as well as how I use support and resistance in my trading; as well as reading the tape.

Todays video centers around two example trades, as well as my thoughts on chart patterns ...

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



Here is the link to the RSS feed to blip.tv's version of the playlist.

* * *

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, September 16, 2010

Too Busy to Blog ?

Lately, it almost seems that I've been too busy to blog. Between family responsibilities, community volunteer efforts as well as being busy with my congregation. I've been shopping for the camera I want to use for my video 'journaling' efforts (I want it to be powerful enough to deliver a clear image, but compatible with Windows XP; I'm thinking I'll use Adobe Premiere for the software. I'm thinking of just picking up a Flip ...)

But I took time this week for the two profitable trades mentioned real-time in the twitter stream. The first one was just a monster opportunity, shorting copper futures; and the other was a short opportunity today in Soybeans. Although I have to admit ... I left a lot on the table with the Soybeans trade.

But I'm going to put together a video that explains them both tomorrow so as to continue the series that discusses my particular trading methodology. (Here is the RSS link to the blip.tv version of that series)

* * *

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, September 14, 2010

Beautiful Day ...

I've been told before that a person should try to focus on the positives in their life, rather than the negatives. To even list the positives as they occur. So let me take a shot at doing that, for today.

It is an absolutely beautiful day here. I mean ... gorgeous. It's the Fall in southeastern Michigan. Crystal blue skies. 75 degrees (23.8 Celsius).

A profitable short opportunity that I discussed and talked about publicly in the twitter stream from the newsletter to the tune of $687.50 per contract.

Dividends were paid to my accounts in a partial DRIP on Johnson & Johnson (JNJ) so that I have some more fractional shares of the company to compound the gains that I am accumulating here, as well as the straight cash that was paid.

I even got a nap in.

Yeup .... it's a beautiful day.

* * *

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, September 13, 2010

Monday Challenge Project Summary: September 13, 2010

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $867.78
Trading "Sister" Balance: $2,019.63
Side-pocket Savings "Sister" Balance: $525.30

Total Challenge Project Funds: $3,412.71


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 TRADING Account.

We're chugging right along with our Challenge Project, which will soon become my main trading vehicle ...

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



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

Challenge Project Balances After Rule No. 2 Deposit:

Goals for Each Account By the Time I Trade Challenge Project Full Time
  • Investing Account: More cash, will evaluate
  • Trading Account: $2,400.00
  • Savings SidePocket Account: $800.30
Investing Account Balance: $879.16
(YTD the account is +10.01% YTD Return is about +5.405% 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 $131.00 available from slush fund
Investing Account Balance Since Inception
(Can be Enlarged):


Stock / Futures Trading Balance: $2,044.63
( YTD cash contributions, equity and return up about 28.09 % )
  • 2% risk tolerance gives us $40.89 'at risk' levels
  • 3% risk tolerance gives us $61.34 'at risk' levels
  • Additional $131.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Side-Pocket Balance: $525.30
(YTD cash equity up about 162.3 % Return on Capital is 0 %)
  • $131.00 for a Slush fund / Drawdown Kill Switch fund
  • $263.30 for a Base Savings
  • $131.00 for Emergency Savings
Savings Side-Pocket Account Balance Since Inception:
(Can Be Enlarged)


Total $500 Challenge Project Balance: $3,449.09

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.

Sunday, September 12, 2010

Week in Review: The Right Frame of Mind (PODCAST)

"Discipline is the bridge between goals and accomplishment." - Jim Rohn

Welcome to the Week in Week in Review podcast!

Usually in these "Week in Review" podcasts, I jump right into a review of the capital markets. What had happened in the stock market. Or what had happened in the commodity markets. And I'll get to that at the end this podcast.

But much of this podcast? I want to talk about an excellent email I received that discusses emotional discipline. About 'being in the right frame of mind'. Because really, that's what I've been focusing in on this last 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.

Wednesday, September 8, 2010

Airelon's Trading Methodology (Series): Entrances and Reading the Tape (VIDEO)

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

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. We then discussed moving forward into a trade by discussing the markets reaction to the established bias. We talked about how I chart, what charting tools I use, and how I use, as well as how I use support and resistance in my trading.

Today, I want to discuss entrances and how I 'read the tape' ....

(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, September 6, 2010

Monday Challenge Project Summary: September 6, 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 being transferred to the Challenge Project SAVINGS SIDE-POCKET Account.

I'm finding that my portfolio management decisions are being made on a data set that is based upon a shorter and shorter time period in duration. In other words, whereas I was making portfolio management decisions considering the broad outline that I had developed for myself for the next month or two? So that I would know where I would be sending the cash in the Challenge Project based on rule no. two a month ahead of time?

I am instead basing portfolio management decisions on an outline of only a week or two.

In fact, I did not finally decide to send this weeks deposit before last Friday.

I thought that if we would see a downturn in the equities market, that I would send rule no. two towards the dividend investing account, and it's need of cash. But the strong close in the equities markets which have given me some 'breathing room' as far as 'time'. So instead, I decided to send that cash towards the sidepocket slush fund.

At this point, we can use $131.00 for a side-pocket fund. Which gives us, possibly, two trades as far as allowable drawdown before the 'kill switch' would be hit.

I'll probably boost up the trading account by a bit, and then you'll see me match those deposits to the savings / side-pocket fund so as to keep the slush fund in step with the capital amounts in the trading account.

In conclusion, last week I specified my goals for the Challenge Project , for each account, and as you can note below, I will keep a list each week with the running balances as to those goals for each account.


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

Challenge Project Balances After Rule No. 2 Deposit:

Goals for Each Account By the Time I Trade Challenge Project Full Time
  • Investing Account: More cash, will evaluate
  • Trading Account: $2,400.00
  • Savings SidePocket Account: $800.30
Investing Account Balance: $867.78
(YTD the account is +8.591% YTD Return is about +4.04% 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 $131.00 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 $131.00 available from drawdown / slush fund
Trading Account Balance Since Inception:
(Can Be Enlarged)

Savings Side-Pocket Balance: $525.30
(YTD cash equity up about 162.3 % Return on Capital is 0 %)
  • $131.00 for a Slush fund / Drawdown Kill Switch fund
  • $263.30 for a Base Savings
  • $131.00 for Emergency Savings
Savings Side-Pocket Account Balance Since Inception:
(Can Be Enlarged)


Total $500 Challenge Project Balance: $3,412.71

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, September 4, 2010

Week in Review: Rants, Oil and Non-Linear Progressions (PODCAST)

"Doing linear scans over an associative array is like trying to club someone to death with a loaded Uzi." - Larry Wall

Welcome to the Week in Week in Review podcast!

I begin with a slight continued rant regarding the migration issues at ThinkorSwim, then we progress to action in the stock market and assocated thoughts regarding when it's 'time' to purchase a dividend bearing stock. I then progress to a discussion of the oil markets, oil prices, and how linear and non-linear modeling relates to the oil 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.

Here is the video of the Porsche 24 Hybrid run ....



* * *

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, September 3, 2010

Airelon's Trading Methodology (Series): Parameters and Chart Studies (VIDEO)

"Even with the best of maps and instruments, we can never fully chart our journeys." - Gail Pool

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. We then discussed moving forward into a trade by discussing the markets reaction to the established bias.

Today, I want to talk about what those charts look like, the studies I use, as well as how I use support and resistance in my trading ...

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



And don't forget, the techniques that I discuss in that video work in conjunction with money management, and portfolio management techniques.

* * *

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, September 1, 2010

Prediction versus a Non-Linear Approach (PODCAST)

"Of course the word chaos is used in rather a vague sense by a lot of writers, but in physics it means a particular phenomenon, namely that in a nonlinear system the outcome is often indefinitely, arbitrarily sensitive to tiny changes in the initial condition." - Murray Gell-Mann

I often tell ones: "Don't predict", "prediction is impossible", "the future is unpredictable", or when asked when I think where the market is going, I respond "I don't know, and I don't care".

Then I'll turn around, and talk about the state of the economy, and what I think is probable in a given market, or even a specific sector.

I'm often asked: "Dan, aren't you contradicting yourself? Aren't you now predicting?"

No, I'm not.

And I hope to clearly quantify my thinking process in the following podcast. I hope to help ones to understand why I've been as accurate as I've been.

It's not "guessing".

It's not overconfidence.

It's not arrogance.

It's a non-linear approach and way of looking at problems.

(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.

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