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Tuesday, May 31, 2011

Challenge Project Summary: May 31, 2011

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $1,254.16
Trading "Sister" Balance: $2,369.36
Side-pocket Savings "Sister" Balance: $800.08
Total Challenge Project Funds: $4,423.60

Introduction:
The original video explanation of the Challenge Project that began with $500, is to be found here. If you would like to hear the "why" behind the challenge project, you can find that here as well as 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, 2010 I have liquidated all of the other personal accounts that I've discussed on this blog for the last 4 years, and to emphasize the strength of these principles? I will demonstrating my success, again, this time it will be live, with the 'Challenge Project', full time.

For this week, there is no application of Rule No. 2; as that has been exhausted for the month of May, 2011. The next application of Rule No. 2 will be on the first Monday of June, 2011.

So tomorrow is June 1, 2011. We're about halfway done with the year, so I thought it was a good time to review what we've accomplished thusfar for the year.

Maneuvering capital. We've added $500.00 of maneuvering capital between the three 'sister' accounts'. I cannot stress that enough. Before any trade is made. Before any investment is purchased. Good grief, before any interest is earned, you have to have maneuvering capital. That means that there will be plenty of money left over after you make the trade. After you purchase the investment. This allows for maneuverability for future purchases and trades, as well as lessens any psychological impact from any drawdown that has to be endured.

Closely associated with the above concept of maneuvering capital, is that two of the three 'sister' accounts are preparing to be used on a more active basis. The trading account will soon be approaching a position in order to trade somewhat more actively, and the savings side-pocket account will soon be able to set up CD yields on ladders, as well as build toward input cost hedging.

Dividend yield. We have earned yield from both Coca-Cola (KO) and Johnson & Johnson (JNJ) both in terms of DRIP accumulation of more shares, as well as cash; these positions being setup in two different accounts so as to take advantage of both DRIP and cash yield. As well, we have a new position with General Mills (GIS) that is earning us, for the moment, straight cash.


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: This Entry describes the next goal. Account is 'active'
  • Trading Account: $2,600.00
  • Savings Side-Pocket Account: This Entry describes the next goal. Account is 'active'

Investing Account Balance: $1,245.90
(YTD the account is +22.11 % YTD Return is about +4.229 % )
  • 6.3283 shares of KO ( DRIP is on for 4.3283 shares - Yield is +2.8266 % )
  • 5.2147 shares of JNJ ( DRIP is on for 3.2147 shares - Yield is +3.4147 % )
  • 6 shares of GIS ( DRIP is not on for any shares - Yield is +2.8506 % )
  • Cash $241.07 ( 19.35 % )
-$150.37 of this cash I reserve for 'maneuvering' capital ( 12.07 % )
-$ 17.94 of this cash I reserve to D.C.A. KO ( 1.44 % )
-$ 42.08 of this cash I reserve to D.C.A. JNJ ( 3.377 % )
-$ 20.68 of this cash I reserve to D.C.A. GIS ( 1.66 % )
-This leaves $ 5.00 cash available for a new purchase ( 0.4013 % )
-This leaves $ 5.00 cash available for a second new purchase ( 0.4013 % )
  • Additional $200.00 ( 16.05 % ) available from slush fund, up to $1,445.90
Investing Account Balance Year to Date
(Can be Enlarged)



Trading "Sister" Account: $2,369.36
( YTD cash equity up 6.759 % Return on Capital is 0 % )
  • 2% risk tolerance gives us $47.38 'at risk' levels
  • 3% risk tolerance gives us $71.08 'at risk' levels
  • Additional $200.00 available from draw-down / slush fund, to $2,569.36
Trading Account Balance Year to Date
(Can Be Enlarged)



Savings Side-Pocket Balance: $800.08
(YTD cash equity up about 28.01 % Return on Capital is 0.01 % )
  • $200.00 for a Slush fund / Draw-down Kill Switch fund
  • $400.08 for a Base Savings
-$322.08 of this cash I reserve for 'burn rate / maneuvering' capital ( 80.5 %)
-$ 56.00 of this cash I reserve for CD Ladder creation ( 14 % )
-$ 9.00 of this cash I reserve for the first side-pocket purchase ( 2.25 % )
-$ 9.00 of this cash I reserve for the second side-pocket
purchase ( 2.25 % )
-$ 4.00 of this cash I reserve for the hedging account ( 0.9998 %)
  • $200.00 for Emergency Saving
Savings Account Balance Year to Date
(Can Be Enlarged)


- As described in previous entries, all deposits past $675.00 will be towards an interest bearing account, although it separate accounts will still be treated as one 'sister' portion of the book


Total $500 Challenge Project Balance: $4,415.34 ( YTD the account is +14.25 % YTD Return is about +1.16 % )

* * *

Note: The above statements should not be construed as an investment or trading recommendation. Airelon's Investing and Trading Journal is a blog that allows subscribers to look 'over my shoulder' as it were, for my own personal specific trading and investing ideas and thoughts for the next week. But they are only thoughts as of the moment of publication, and are subject to change.. Any trades or investments that I discuss within this blog are simply my own thoughts regarding my own investing and trading outlook. Remember that entering any market is an individual decision. There is no guarantee that I will enter, or have entered any of the trading or investing ideas that I discuss in this blog; as larger accounts may require a different strategy as the ones presented here. This blog simply contains my trading and investing thoughts for the next week. I, the author do not grant this work for wide distribution beyond any single individual subscriber as this publication is protected by U.S. And International Copyright laws. All rights reserved. No license is granted to the user except for the user's personal use. No part of this publication or its contents may be copied, downloaded, stored in a retrieval system, further transmitted or otherwise reproduced, stored, disseminated, transferred, or used, in any form or by any means except as permitted under the original subscription agreement or with prior written permission. I personally only enter any market after watching and reading the tape and I trade using money management principles. The losses in trading can be very real, and depending on the investment vehicle and market, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. I do have 15 years of experience in trading and investing in these markets. Airelon's Challenge Chronicles are demo accounts,with all of the inherent problems therein, which are used within this blog in an attempt to track the results of my own thought processes., and is run as a model. Traders who should make their own decisions based off their own research, due diligence, and tolerance for risk. Any pictures used within this blog are believed to be public domain. Any charts that displayed using the ThinkorSwim platform, or any other charting software are believed to be public domain. Any other pictures were obtained through Wikipedia's public domain policy. As a reminder, any trades discussed for "Airelon's Challenge Chronicles" would only be 'day trades' according to the parameters discussed for Airelon's Challenge Chronicles, at this stage of the game in order to escape the risk of over-leveraged gap opens in the commodity futures markets. As a 'trading sister' would have grown to the $30,000 level, I would have graduated the account into 'swing trading'. In addition, it is understood that readers have read my YouTube methodology series. It is also understood that the writer of this blog has repeatedly warned against the dangers of shadowing any other traders thoughts. 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, May 29, 2011

Airelon's Challenge Chronicles 21 (PODCAST)

So what is "Airelon's Challenge Chronicles"? You can find a description by clicking here. It is also very important to understand my particular method of portfolio management.

For this week, there are no applications of Rule No. Two. We have already exhausted that for the month of May, 2011. The next application will be the first Sunday of June, 2011.

This week, there is a lot to say on the portfolio management and discipline side of the equation.

(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.

As follows is a summary of the "Challenge Chronicle" 'three sister' accounts as of this entry ...



Investing "Sister" Account: Will no longer make Rule No. Two Deposits to this Account. Challenge Project Investing Account is Active. I will continue to track this account so as to mark progress of previous decisions.

Investing "Sister" Account:
$1,576.53

( YTD the account is +13.65 % Return on Capital YTD is +5.302 % )
  • 6.3283 shares of KO ( DRIP is on for 4.3283 shares - Yield is +2.8266 % )
  • 5.2147 shares of JNJ ( DRIP is on for 3.2147 shares - Yield is +3.4147 % )
  • 10.15282 shares of GIS ( DRIP on for 10.15282 share - Yield is +2.8506 % )
  • Cash $388.73 ( 24.66 % )
- $200.00 of this cash I reserve for 'maneuvering' capital ( 12.69 % )
- $ 45.00 of this cash I reserve to D.C.A. KO ( 2.854 % )

- $ 78.00 of this cash I reserve to D.C.A. JNJ ( 4.948 % )
- $ 31.98 of this cash I reserve to D.C.A. GIS ( 2.029
% )
- This leaves $23.75 cash available for a new purchase ( 1.506 % )
- This leaves $10.00 cash available for a second new purchase ( 0.6343 % )
  • Additional $243.75 ( 15.46 % ) available from slush fund, up to $1,820.28


Trading "Sister" Account
: $3,162.51
( YTD the account is +21.27 % True Return on Capital YTD is +8.201 % )
  • 2% risk tolerance gives us $63.25 'at risk' levels
  • 3% risk tolerance gives us $94.87 'at risk' levels
  • Additional $243.75 available from draw-down / slush fund, to $3,406.26


Savings Side-Pocket Balance: Will no longer make Rule No. Two Deposits to this Account. Challenge Project Savings Side-Pocket is Active.
I will continue to track this account so as to mark progress of previous decisions.

I will credit the $0.07 interest payment of May that is paid today on this entry


Savings Side-Pocket Balance: $975.34
(YTD cash equity up about 8.371 % Return on Capital is 0.03487 %)
  • $243.75 for a Slush fund / Draw-down Kill Switch fund
  • $487.77 for a Base Savings
-$401.84 of this cash I reserve for 'burn rate / maneuvering' capital ( 82.37 %)
-$ 59.00 of this cash I reserve for CD Ladder creation ( 12.1 % )
-$ 10.00 of this cash I reserve for the first side-pocket purchase ( 2.05 %)
-$ 10.00 of this cash I reserve for the second side-pocket
purchase ( 2.05 %)
-$ 7.00 of this cash I reserve for the hedging account ( 1.435 %)
  • $243.75 for Emergency Savings
-$731.52 of this cash is in an interest bearing account.
-$243.75 remains at the brokerage in an account for draw-down


Total Airelon's Challenge Chronicles Balance: $5,714.38 ( YTD the account is +16.74 % Return on Capital YTD is +5.921 % )


And once again, here are the money management performance metrics as they exist after the trades of last week ...


* * *

Note: The above statements should not be construed as an investment or trading recommendation. Airelon's Investing and Trading Journal is a blog that allows subscribers to look 'over my shoulder' as it were, for my own personal specific trading and investing ideas and thoughts for the next week. But they are only thoughts as of the moment of publication, and are subject to change.. Any trades or investments that I discuss within this blog are simply my own thoughts regarding my own investing and trading outlook. Remember that entering any market is an individual decision. There is no guarantee that I will enter, or have entered any of the trading or investing ideas that I discuss in this blog; as larger accounts may require a different strategy as the ones presented here. This blog simply contains my trading and investing thoughts for the next week. I, the author do not grant this work for wide distribution beyond any single individual subscriber as this publication is protected by U.S. And International Copyright laws. All rights reserved. No license is granted to the user except for the user's personal use. No part of this publication or its contents may be copied, downloaded, stored in a retrieval system, further transmitted or otherwise reproduced, stored, disseminated, transferred, or used, in any form or by any means except as permitted under the original subscription agreement or with prior written permission. I personally only enter any market after watching and reading the tape and I trade using money management principles. The losses in trading can be very real, and depending on the investment vehicle and market, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 15 years of experience in trading and investing in these markets. Airelon's Challenge Chronicles are demo accounts,with all of the inherent problems therein, which are used within this blog in an attempt to track the results of my own thought processes., and is run as a model. Traders who should make their own decisions based off their own research, due diligence, and tolerance for risk. Any pictures used within this blog are believed to be public domain. Any charts that displayed using the ThinkorSwim platform, or any other charting software are believed to be public domain. Any other pictures were obtained through Wikipedia's public domain policy. As a reminder, any trades discussed for "Airelon's Challenge Chronicles" would only be 'day trades' according to the parameters discussed for Airelon's Challenge Chronicles, at this stage of the game in order to escape the risk of over-leveraged gap opens in the commodity futures markets. As a 'trading sister' would have grown to the $30,000 level, I would have graduated the account into 'swing trading'. In addition, it is understood that readers have read my YouTube methodology series. It is also understood that the writer of this blog has repeatedly warned against the dangers of shadowing any other traders thoughts. 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, May 28, 2011

Week in Review: Reviewing A.C.C. Number 20 ... (VIDEO)

"Trading only using technical analysis as your guide, with no thought as to a fundamental reason as to 'why' the market may move in a particular direction? Is like dialing in the sights on your rifle, but not watching where you are aiming it in the first place" - Personal Axiom

Welcome to the Week in Week in Review!

For this week in review, I want to try something a little different.

Long time blog readers know that when I used to run the newsletter, I used to review my investing actions and trades at the end of each week.

I thought I would do something similar this week for the "Week in Review". Review how investing and trading from the last week based on the comments in "Airelon's Challenge Chronicles No. 20", while at the same time trying to explain my thoughts of how I treat 'hedges', as well as what a 'typical 'Dan' trade' looks like ...

(Video included. If you're seeing this entry elsewhere and cannot play the video? Click this link to go to the exact entry ...)




Here is the blip.tv version of this video.

* * *

Note: The above statements should not be construed as an investment or trading recommendation. Airelon's Investing and Trading Journal is a blog that allows subscribers to look 'over my shoulder' as it were, for my own personal specific trading and investing ideas and thoughts for the next week. But they are only thoughts as of the moment of publication, and are subject to change.. Any trades or investments that I discuss within this blog are simply my own thoughts regarding my own investing and trading outlook. Remember that entering any market is an individual decision. There is no guarantee that I will enter, or have entered any of the trading or investing ideas that I discuss in this blog; as larger accounts may require a different strategy as the ones presented here. This blog simply contains my trading and investing thoughts for the next week. I, the author do not grant this work for wide distribution beyond any single individual subscriber as this publication is protected by U.S. And International Copyright laws. All rights reserved. No license is granted to the user except for the user's personal use. No part of this publication or its contents may be copied, downloaded, stored in a retrieval system, further transmitted or otherwise reproduced, stored, disseminated, transferred, or used, in any form or by any means except as permitted under the original subscription agreement or with prior written permission. I personally only enter any market after watching and reading the tape and I trade using money management principles. The losses in trading can be very real, and depending on the investment vehicle and market, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 15 years of experience in trading and investing in these markets. Airelon's Challenge Chronicles are demo accounts,with all of the inherent problems therein, which are used within this blog in an attempt to track the results of my own thought processes., and is run as a model. Traders who should make their own decisions based off their own research, due diligence, and tolerance for risk. Any pictures used within this blog are believed to be public domain. Any charts that displayed using the ThinkorSwim platform, or any other charting software are believed to be public domain. Any other pictures were obtained through Wikipedia's public domain policy. As a reminder, any trades discussed for "Airelon's Challenge Chronicles" would only be 'day trades' according to the parameters discussed for Airelon's Challenge Chronicles, at this stage of the game in order to escape the risk of over-leveraged gap opens in the commodity futures markets. As a 'trading sister' would have grown to the $30,000 level, I would have graduated the account into 'swing trading'. In addition, it is understood that readers have read my YouTube methodology series. It is also understood that the writer of this blog has repeatedly warned against the dangers of shadowing any other traders thoughts. 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, May 27, 2011

Week in Review ? Fatigue .... (PODCAST and VIDEO)

"Fatigue makes cowards of us all" - Vince Lombardi

I'm in the midst of a bit of a 'break' when it comes to my blogging efforts due to a bit of 'fatigue'. I want to talk about that 'fatigue' here for a moment, if you'll allow me ...

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




Click here to download this podcast.

Some folks prefer the video version of the "Week in Review". If you prefer the video version, I have included that below on YouTube ...

(Video included. If you're seeing this entry elsewhere and cannot play the video? Click this link to go to the exact entry ...)




Here is the blip.tv version
of this podcast.

* * *

Note: The above statements should not be construed as an investment or trading recommendation. Airelon's Investing and Trading Journal is a blog that allows subscribers to look 'over my shoulder' as it were, for my own personal specific trading and investing ideas and thoughts for the next week. But they are only thoughts as of the moment of publication, and are subject to change.. Any trades or investments that I discuss within this blog are simply my own thoughts regarding my own investing and trading outlook. Remember that entering any market is an individual decision. There is no guarantee that I will enter, or have entered any of the trading or investing ideas that I discuss in this blog; as larger accounts may require a different strategy as the ones presented here. This blog simply contains my trading and investing thoughts for the next week. I, the author do not grant this work for wide distribution beyond any single individual subscriber as this publication is protected by U.S. And International Copyright laws. All rights reserved. No license is granted to the user except for the user's personal use. No part of this publication or its contents may be copied, downloaded, stored in a retrieval system, further transmitted or otherwise reproduced, stored, disseminated, transferred, or used, in any form or by any means except as permitted under the original subscription agreement or with prior written permission. I personally only enter any market after watching and reading the tape and I trade using money management principles. The losses in trading can be very real, and depending on the investment vehicle and market, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 15 years of experience in trading and investing in these markets. Airelon's Challenge Chronicles are demo accounts,with all of the inherent problems therein, which are used within this blog in an attempt to track the results of my own thought processes., and is run as a model. Traders who should make their own decisions based off their own research, due diligence, and tolerance for risk. Any pictures used within this blog are believed to be public domain. Any charts that displayed using the ThinkorSwim platform, or any other charting software are believed to be public domain. Any other pictures were obtained through Wikipedia's public domain policy. As a reminder, any trades discussed for "Airelon's Challenge Chronicles" would only be 'day trades' according to the parameters discussed for Airelon's Challenge Chronicles, at this stage of the game in order to escape the risk of over-leveraged gap opens in the commodity futures markets. As a 'trading sister' would have grown to the $30,000 level, I would have graduated the account into 'swing trading'. In addition, it is understood that readers have read my YouTube methodology series. It is also understood that the writer of this blog has repeatedly warned against the dangers of shadowing any other traders thoughts. 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 ris

Wednesday, May 25, 2011

A Comment on Savings and the Challenge Project ...

I'm a 'saver'.

It's something about the way that I'm built.

So it should be noted that I have many savings accounts, spread around quite a few banking institutions. I have accounts built for specific needs. An account that is reserved for traveling expenses, such as trips to Europe and Asia. There is another account dedicated towards the move that my wife and I will make to Mexico. And yes ... an account that is built upon the idea of spending money. I call it my 10/1 account; in that for every $10 I have in savings, I am allowed to spend $1.00 on something I want. When I have $100.00, then I can spend $10.00 on any sort of 'toy' that I've had my eye on.

I also have an account built for the purpose of expanding my 'burn rate'.

What's a 'burn rate'?

Well, for an individual, it simply means how much money you burn through in a month. What is your typical expenditures in a month? That's your personal, individual burn rate. And it's typically considered a wise idea to have a few years of a burn rate saved. So for the sake of example, let's say you want 24 months of savings.

You lose your job, and you could use your burn rate savings for at least 2 years, and live as you do now. If your typical expenditures in a month is $3,000.00, then that means that you would need savings of approximately $72,000.00 to last you for two years; that is reserved for that purpose.

Obviously, most people who are just starting out (who I try to appeal to) do not have $72,000.00

So as with all things in life ... you have to build up to that level.

Now ... what about the Challenge Project? Such an important concept is not represented. Why? Because as I've said, I have other savings accounts apart from my project.

So after thinking it over a bit throughout my day, I've decide to rename the that portion of the Challenge Project's Base Savings labeled as 'manuevering capital' to that of 'burn savings'. This capital can also be used as was the 'maneuvering capital', so this cash is flexible. But I thought it important to make note of this slight change so that I can illustrate such a key savings concept with the Challenge Project itself.


Savings Side-Pocket Balance: $800.08
(YTD cash equity up about 28.01 % Return on Capital is 0.01 % )
  • $200.00 for a Slush fund / Draw-down Kill Switch fund
  • $400.08 for a Base Savings
-$322.08 of this cash I reserve for 'burn rate / maneuvering' capital ( 80.5 %)
-$ 56.00 of this cash I reserve for CD Ladder creation ( 14 % )
-$ 9.00 of this cash I reserve for the first side-pocket purchase ( 2.25 % )
-$ 9.00 of this cash I reserve for the second side-pocket
purchase ( 2.25 % )
-$ 4.00 of this cash I reserve for the hedging account ( 0.9998 %)
  • $200.00 for Emergency Saving
* * *

Note: The above statements should not be construed as an investment or trading recommendation. Airelon's Investing and Trading Journal is a blog that allows subscribers to look 'over my shoulder' as it were, for my own personal specific trading and investing ideas and thoughts for the next week. But they are only thoughts as of the moment of publication, and are subject to change.. Any trades or investments that I discuss within this blog are simply my own thoughts regarding my own investing and trading outlook. Remember that entering any market is an individual decision. There is no guarantee that I will enter, or have entered any of the trading or investing ideas that I discuss in this blog; as larger accounts may require a different strategy as the ones presented here. This blog simply contains my trading and investing thoughts for the next week. I, the author do not grant this work for wide distribution beyond any single individual subscriber as this publication is protected by U.S. And International Copyright laws. All rights reserved. No license is granted to the user except for the user's personal use. No part of this publication or its contents may be copied, downloaded, stored in a retrieval system, further transmitted or otherwise reproduced, stored, disseminated, transferred, or used, in any form or by any means except as permitted under the original subscription agreement or with prior written permission. I personally only enter any market after watching and reading the tape and I trade using money management principles. The losses in trading can be very real, and depending on the investment vehicle and market, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. I do have 15 years of experience in trading and investing in these markets. Airelon's Challenge Chronicles are demo accounts,with all of the inherent problems therein, which are used within this blog in an attempt to track the results of my own thought processes., and is run as a model. Traders who should make their own decisions based off their own research, due diligence, and tolerance for risk. Any pictures used within this blog are believed to be public domain. Any charts that displayed using the ThinkorSwim platform, or any other charting software are believed to be public domain. Any other pictures were obtained through Wikipedia's public domain policy. As a reminder, any trades discussed for "Airelon's Challenge Chronicles" would only be 'day trades' according to the parameters discussed for Airelon's Challenge Chronicles, at this stage of the game in order to escape the risk of over-leveraged gap opens in the commodity futures markets. As a 'trading sister' would have grown to the $30,000 level, I would have graduated the account into 'swing trading'. In addition, it is understood that readers have read my YouTube methodology series. It is also understood that the writer of this blog has repeatedly warned against the dangers of shadowing any other traders thoughts. 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, May 24, 2011

Airelon's Challenge Chronicles 20.2: Bad Trading ... Profitable Trading

What is "Airelon's Challenge Chronicles"? You can find a description by clicking here.

So if you were watching either the Facebook page yesterday, or the Twitter Account, you'll see that I took action on a couple of trades that I mentioned in Sundays A.C.C. podcast. Namely, I went short Corn for a brief scalp, and I went short Soybean Meal for another scalp.

I walked out of both trades with a profit on very brief scalps. Tacked on another 3% or so to the yield return on the A.C.C. trading account.

But quite frankly ... it was a horrible day of trading, and there's no way I'm going to fool myself into thinking otherwise.

Allow me to explain.

One thing I did not consider before taking the short Corn trade ... was something that I often tell other traders to be aware of. So I ended up making a mistake. One that could have cost me dearly. Perhaps as much as 4% of my trading account. Yes ... I make mistakes. All the time.

What I should have considered was the average range of the candles, or volatility as it relates to the $ per tick. Corn moves with $12.50 per tick. The average range of one candle on the 10 minute chart at the time was about 20 ticks for a 10 minute chart.

20 ticks.

$12.50 per tick.

$250.00 for one bar.

Now look over the risk tolerance numbers that I posted on Sunday night. My maximum 3% drawdown risk tolerance stood at $92.08. So I was looking at a scenario where 10 minutes could have wiped out 2.7 times my maximum drawdown risk tolerance in just 10 minutes. Naturally, I had some rather substantial 'intra-trade drawdown' as well, even though you can see I exited that trade with a profit. I am going to list the updated money management numbers after the two trades today, and you'll note that my drawdown numbers have increased dramatically.

It's taking a while to get used to trading such a small account.

So ... at this point? I'm thinking of just cooling it on the trading route for A.C.C. for the next week. Yes ... I added 3% to the account in one day on some really sloppy scalp trading, but I think I will wait until we can add a bit more 'starter fluid' in terms of an application of rule number two.





* * *

Note: The above statements should not be construed as an investment or trading recommendation. Airelon's Investing and Trading Journal is a blog that allows subscribers to look 'over my shoulder' as it were, for my own personal specific trading and investing ideas and thoughts for the next week. But they are only thoughts as of the moment of publication, and are subject to change.. Any trades or investments that I discuss within this blog are simply my own thoughts regarding my own investing and trading outlook. Remember that entering any market is an individual decision. There is no guarantee that I will enter, or have entered any of the trading or investing ideas that I discuss in this blog; as larger accounts may require a different strategy as the ones presented here. This blog simply contains my trading and investing thoughts for the next week. I, the author do not grant this work for wide distribution beyond any single individual subscriber as this publication is protected by U.S. And International Copyright laws. All rights reserved. No license is granted to the user except for the user's personal use. No part of this publication or its contents may be copied, downloaded, stored in a retrieval system, further transmitted or otherwise reproduced, stored, disseminated, transferred, or used, in any form or by any means except as permitted under the original subscription agreement or with prior written permission. I personally only enter any market after watching and reading the tape and I trade using money management principles. The losses in trading can be very real, and depending on the investment vehicle and market, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. I do have 15 years of experience in trading and investing in these markets. Airelon's Challenge Chronicles are demo accounts,with all of the inherent problems therein, which are used within this blog in an attempt to track the results of my own thought processes., and is run as a model. Traders who should make their own decisions based off their own research, due diligence, and tolerance for risk. Any pictures used within this blog are believed to be public domain. Any charts that displayed using the ThinkorSwim platform, or any other charting software are believed to be public domain. Any other pictures were obtained through Wikipedia's public domain policy. As a reminder, any trades discussed for "Airelon's Challenge Chronicles" would only be 'day trades' according to the parameters discussed for Airelon's Challenge Chronicles, at this stage of the game in order to escape the risk of over-leveraged gap opens in the commodity futures markets. As a 'trading sister' would have grown to the $30,000 level, I would have graduated the account into 'swing trading'. In addition, it is understood that readers have read my YouTube methodology series. It is also understood that the writer of this blog has repeatedly warned against the dangers of shadowing any other traders thoughts. 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, May 23, 2011

Monday Challenge Project Summary: May 23, 2011

Previous $500 Challenge Project Balances:

"The Three Sisters":

Investing "Sister" Balance: $1,258.18
Trading "Sister" Balance: $2,344.36

Side-pocket Savings "Sister" Balance: $800.08
Total Challenge Project Funds: $4,402.62

Introduction:
The original video explanation of the Challenge Project that began with $500, is to be found here. If you would like to hear the "why" behind the challenge project, you can find that here as well as 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, 2010 I have liquidated all of the other personal accounts that I've discussed on this blog for the last 4 years, and to emphasize the strength of these principles? I will demonstrating my success, again, this time it will be live, with the 'Challenge Project', full time.

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

Remember ... as I have mentioned on previous entries, I'm currently using a very specific 'rule no. two rotation' at the moment.

"I'll be looking for every 1 application of rule no. two towards the dividend investing 'sister' account, for 3 deposits to the savings-side-pocket 'sister', and 5 deposits towards the trading 'sister' account."


We are now beginning the last round of this rotation that is applied toward the trading sister account. This marks the fourth of five such applications of rule no. two towards the trading account. Thus, we are one week away from this current 'rotations' completion.

You'll also note that since we are far enough along in the year, I have decided to once again begin posting weekly charts showing the progress of 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: This Entry describes the next goal. Account is 'active'
  • Trading Account: $2,600.00
  • Savings Side-Pocket Account: This Entry describes the next goal. Account is 'active'

Investing Account Balance: $1,254.16
(YTD the account is +22.91 % YTD Return is abou
t +4.92 % )
  • 6.3283 shares of KO ( DRIP is on for 4.3283 shares - Yield is +2.7526 % )
  • 5.2147 shares of JNJ ( DRIP is on for 3.2147 shares - Yield is +3.4708 % )
  • 6 shares of GIS ( DRIP is not on for any shares - Yield is +2.8197 % )
  • Cash $241.07 ( 19.22 % )
-$150.37 of this cash I reserve for 'maneuvering' capital ( 11.99 % )
-$ 17.94 of this cash I reserve to D.C.A. KO ( 1.43 % )
-$ 42.08 of this cash I reserve to D.C.A. JNJ ( 3.355 % )
-$ 20.68 of this cash I reserve to D.C.A. GIS ( 1.649 % )
-This leaves $ 5.00 cash available for a new purchase ( 0.3987 % )
-This leaves $ 5.00 cash available for a second new purchase ( 0.3987 % )
  • Additional $200.00 ( 15.95 % ) available from slush fund, up to $1,454.16
Investing Account Balance Year to Date
(Can be Enlarged)


Trading "Sister" Account: $2,369.36
( YTD cash equity up 6.759 % Return on Capital is 0 % )
  • 2% risk tolerance gives us $47.38 'at risk' levels
  • 3% risk tolerance gives us $71.08 'at risk' levels
  • Additional $200.00 available from draw-down / slush fund, to $2,569.36
Trading Account Balance Year to Date
(Can Be Enlarged)


Savings Side-Pocket Balance: $800.08
(YTD cash equity up about 28.01 % Return on Capital is 0.01 % )
  • $200.00 for a Slush fund / Draw-down Kill Switch fund
  • $400.08 for a Base Savings
-$322.08 of this cash I reserve for savings 'maneuvering' capital ( 80.5 %)
-$ 56.00 of this cash I reserve for CD Ladder creation ( 14 % )
-$ 9.00 of this cash I reserve for the first side-pocket purchase ( 2.25 % )
-$ 9.00 of this cash I reserve for the second side-pocket
purchase ( 2.25 % )
-$ 4.00 of this cash I reserve for the hedging account ( 0.9998 %)
  • $200.00 for Emergency Saving
Savings Account Balance Year to Date
(Can Be Enlarged)

- As described in previous entries, all deposits past $675.00 will be towards an interest bearing account, although it separate accounts will still be treated as one 'sister' portion of the book


Total $500 Challenge Project Balance: $4,423.60 ( YTD the account is +14.46 % YTD Return is about +1.349 % )

* * *

Note: The above statements should not be construed as an investment or trading recommendation. Airelon's Investing and Trading Journal is a blog that allows subscribers to look 'over my shoulder' as it were, for my own personal specific trading and investing ideas and thoughts for the next week. But they are only thoughts as of the moment of publication, and are subject to change.. Any trades or investments that I discuss within this blog are simply my own thoughts regarding my own investing and trading outlook. Remember that entering any market is an individual decision. There is no guarantee that I will enter, or have entered any of the trading or investing ideas that I discuss in this blog; as larger accounts may require a different strategy as the ones presented here. This blog simply contains my trading and investing thoughts for the next week. I, the author do not grant this work for wide distribution beyond any single individual subscriber as this publication is protected by U.S. And International Copyright laws. All rights reserved. No license is granted to the user except for the user's personal use. No part of this publication or its contents may be copied, downloaded, stored in a retrieval system, further transmitted or otherwise reproduced, stored, disseminated, transferred, or used, in any form or by any means except as permitted under the original subscription agreement or with prior written permission. I personally only enter any market after watching and reading the tape and I trade using money management principles. The losses in trading can be very real, and depending on the investment vehicle and market, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. I do have 15 years of experience in trading and investing in these markets. Airelon's Challenge Chronicles are demo accounts,with all of the inherent problems therein, which are used within this blog in an attempt to track the results of my own thought processes., and is run as a model. Traders who should make their own decisions based off their own research, due diligence, and tolerance for risk. Any pictures used within this blog are believed to be public domain. Any charts that displayed using the ThinkorSwim platform, or any other charting software are believed to be public domain. Any other pictures were obtained through Wikipedia's public domain policy. As a reminder, any trades discussed for "Airelon's Challenge Chronicles" would only be 'day trades' according to the parameters discussed for Airelon's Challenge Chronicles, at this stage of the game in order to escape the risk of over-leveraged gap opens in the commodity futures markets. As a 'trading sister' would have grown to the $30,000 level, I would have graduated the account into 'swing trading'. In addition, it is understood that readers have read my YouTube methodology series. It is also understood that the writer of this blog has repeatedly warned against the dangers of shadowing any other traders thoughts. 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, May 22, 2011

Airelon's Challenge Chronicles 20 (PODCAST)

So what is "Airelon's Challenge Chronicles"? You can find a description by clicking here.

For this week, the $50.00 deposit is being transferred to the Challenge Project TRADING Account. I had forgotten to update this in the last entry.

This week, I have specific thoughts on the dividend investing route, as well as four trades that I'm watching and observing to see if I can take ...

(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.

As follows is a summary of the "Challenge Chronicle" 'three sister' accounts as of this entry ...



Investing "Sister" Account: Will no longer make Rule No. Two Deposits to this Account. Challenge Project Investing Account is Active. I will continue to track this account so as to mark progress of previous decisions.

Investing "Sister" Account:
$1,587.12

( YTD the account is +14.42 % Return on Capital YTD is +6.009 % )
  • 6.3283 shares of KO ( DRIP is on for 4.3283 shares - Yield is +2.7526 % )
  • 5.2147 shares of JNJ ( DRIP is on for 3.2147 shares - Yield is +3.4708 % )
  • 10.15282 shares of GIS ( DRIP on for 10.15282 share - Yield is +2.8197 % )
  • Cash $388.73 ( 24.49 % )
- $200.00 of this cash I reserve for 'maneuvering' capital ( 12.6 % )
- $ 45.00 of this cash I reserve to D.C.A. KO ( 2.835 % )

- $ 78.00 of this cash I reserve to D.C.A. JNJ ( 4.915 % )
- $ 31.98 of this cash I reserve to D.C.A. GIS ( 2.015
% )
- This leaves $23.75 cash available for a new purchase ( 1.496 % )
- This leaves $10.00 cash available for a second new purchase ( 0.6301 % )
  • Additional $243.75 ( 15.36 % ) available from slush fund, up to $1,830.87


Trading "Sister" Account
: $3,069.37
( YTD the account is +17.7 % True Return on Capital YTD is +5.014 % )
  • 2% risk tolerance gives us $61.38 'at risk' levels
  • 3% risk tolerance gives us $92.08 'at risk' levels
  • Additional $243.75 available from draw-down / slush fund, to $3,313.12


Savings Side-Pocket Balance: Will no longer make Rule No. Two Deposits to this Account. Challenge Project Savings Side-Pocket is Active.
I will continue to track this account so as to mark progress of previous decisions.

Savings Side-Pocket Balance: $975.27
(YTD cash equity up about 8.356 % Return on Capital is 0.02051 %)
  • $243.75 for a Slush fund / Draw-down Kill Switch fund
  • $487.77 for a Base Savings
-$401.77 of this cash I reserve for savings 'maneuvering' capital ( 82.37 %)
-$ 59.00 of this cash I reserve for CD Ladder creation ( 12.1 % )
-$ 10.00 of this cash I reserve for the first side-pocket purchase ( 2.05 %)
-$ 10.00 of this cash I reserve for the second side-pocket
purchase ( 2.05 %)
-$ 7.00 of this cash I reserve for the hedging account ( 1.435 %)
  • $243.75 for Emergency Savings
-$731.52 of this cash is in an interest bearing account.
-$243.75 remains at the brokerage in an account for draw-down


Total Airelon's Challenge Chronicles Balance: $5,631.76 ( YTD the account is +15.05 % Return on Capital YTD is +4.389 % )


And once again, here are the money management performance metrics as they exist. There were no trades last week.



* * *

Note: The above statements should not be construed as an investment or trading recommendation. Airelon's Investing and Trading Journal is a blog that allows subscribers to look 'over my shoulder' as it were, for my own personal specific trading and investing ideas and thoughts for the next week. But they are only thoughts as of the moment of publication, and are subject to change.. Any trades or investments that I discuss within this blog are simply my own thoughts regarding my own investing and trading outlook. Remember that entering any market is an individual decision. There is no guarantee that I will enter, or have entered any of the trading or investing ideas that I discuss in this blog; as larger accounts may require a different strategy as the ones presented here. This blog simply contains my trading and investing thoughts for the next week. I, the author do not grant this work for wide distribution beyond any single individual subscriber as this publication is protected by U.S. And International Copyright laws. All rights reserved. No license is granted to the user except for the user's personal use. No part of this publication or its contents may be copied, downloaded, stored in a retrieval system, further transmitted or otherwise reproduced, stored, disseminated, transferred, or used, in any form or by any means except as permitted under the original subscription agreement or with prior written permission. I personally only enter any market after watching and reading the tape and I trade using money management principles. The losses in trading can be very real, and depending on the investment vehicle and market, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 15 years of experience in trading and investing in these markets. Airelon's Challenge Chronicles are demo accounts,with all of the inherent problems therein, which are used within this blog in an attempt to track the results of my own thought processes., and is run as a model. Traders who should make their own decisions based off their own research, due diligence, and tolerance for risk. Any pictures used within this blog are believed to be public domain. Any charts that displayed using the ThinkorSwim platform, or any other charting software are believed to be public domain. Any other pictures were obtained through Wikipedia's public domain policy. As a reminder, any trades discussed for "Airelon's Challenge Chronicles" would only be 'day trades' according to the parameters discussed for Airelon's Challenge Chronicles, at this stage of the game in order to escape the risk of over-leveraged gap opens in the commodity futures markets. As a 'trading sister' would have grown to the $30,000 level, I would have graduated the account into 'swing trading'. In addition, it is understood that readers have read my YouTube methodology series. It is also understood that the writer of this blog has repeatedly warned against the dangers of shadowing any other traders thoughts. 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, May 21, 2011

Week in Review: How Emotional Intelligence Applies ... Today (PODCAST)

"Theory may raise your hopes but practice raises your income"

Welcome to the Week in Week in Review podcast!

So last week I had an entry on "Emotional Intelligence" that discussed the concepts of confirmation bias, and the standardization of deviations.

For the week in review, I want to discuss how I apply such concepts as I look at the markets of the 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: The above statements should not be construed as an investment or trading recommendation. Airelon's Investing and Trading Journal is a blog that allows subscribers to look 'over my shoulder' as it were, for my own personal specific trading and investing ideas and thoughts for the next week. But they are only thoughts as of the moment of publication, and are subject to change.. Any trades or investments that I discuss within this blog are simply my own thoughts regarding my own investing and trading outlook. Remember that entering any market is an individual decision. There is no guarantee that I will enter, or have entered any of the trading or investing ideas that I discuss in this blog; as larger accounts may require a different strategy as the ones presented here. This blog simply contains my trading and investing thoughts for the next week. I, the author do not grant this work for wide distribution beyond any single individual subscriber as this publication is protected by U.S. And International Copyright laws. All rights reserved. No license is granted to the user except for the user's personal use. No part of this publication or its contents may be copied, downloaded, stored in a retrieval system, further transmitted or otherwise reproduced, stored, disseminated, transferred, or used, in any form or by any means except as permitted under the original subscription agreement or with prior written permission. I personally only enter any market after watching and reading the tape and I trade using money management principles. The losses in trading can be very real, and depending on the investment vehicle and market, can exceed your initial investment. I am not a licensed trading or investment adviser, or financial planner. But I do have 15 years of experience in trading and investing in these markets. Airelon's Challenge Chronicles are demo accounts,with all of the inherent problems therein, which are used within this blog in an attempt to track the results of my own thought processes., and is run as a model. Traders who should make their own decisions based off their own research, due diligence, and tolerance for risk. Any pictures used within this blog are believed to be public domain. Any charts that displayed using the ThinkorSwim platform, or any other charting software are believed to be public domain. Any other pictures were obtained through Wikipedia's public domain policy. As a reminder, any trades discussed for "Airelon's Challenge Chronicles" would only be 'day trades' according to the parameters discussed for Airelon's Challenge Chronicles, at this stage of the game in order to escape the risk of over-leveraged gap opens in the commodity futures markets. As a 'trading sister' would have grown to the $30,000 level, I would have graduated the account into 'swing trading'. In addition, it is understood that readers have read my YouTube methodology series. It is also understood that the writer of this blog has repeatedly warned against the dangers of shadowing any other traders thoughts. 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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