Sunday, February 7, 2010

About me (Part 2 of 3)

Since restarting in December with a $4,000 account, I have had 19 losing trades and only 8 winners (two trades closed in February are not yet shown). However, my winners have averaged over $200 while my losers have averaged just under $60. Yesterday, just prior to the market close I saw one of my strongest buy signals (the T2108 below 30 and all indexes put in an extremely bullish tail after a 10% + sell off e.g. the correction of july/august 2007 ). I was tempted to load up on stock options of my favorite stocks. Instead I decided to stick to my risk management plan and open two stock positions only. When I first started trading, my first thought was always landing that big time winner. However, nowadays the thought of a crippling loss always keeps me from gambling. So I bought 225 shares of SPU and 200 shares of NEP. My stops are positioned below swing lows so that I am risking a total of $200 on both positions or slightly more than 2% of my account on each trade. So now I have complete peace of mind no matter what happens on monday and beyond. Worst case scenario the market continues to sell off and take both SPU and NEP down with it, I lose $200 plus $20 commissions (assuming they do not gap down and I am not a victim of slippage; my current broker is thinkorswim.com). Or even better, the market moves up preferably gapping up with both SPU and NEP moving up sharply. I will move my stops to breakeven on both positions and open at least two new positions in stocks I like including SPU and NEP. The bottom line is that the future is uncertain but with a robust trading concept like CANSLIM or any of those on stockbee.blogspot.com and sound risk management anyone can navigate the “complex” financial markets to profits.

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