Out of BRCM with 10% profit

and buying RIMM June 75 Call....will post details later

New Trade

Sold BAC Call and trying to buy a BRCM May 23 put now...will post details this evening

BAC Trade

The BAC trade ended up being a great one. The underlying is up 15% and my option(BYO EX) is currently up 180%.
Currently I haven't closed the position yet but I have a stop @ $2 and the option is trading at 2.50. I will update the blog with the outcome of the trade sometime tonight

Current Balance: 2282.38

Trading Rules

Trading Rules
1. Buy between 1:30pm and 2:15pm

Rationale: This is the time when stocks pullback and make room for the big money that is coming from bond traders. FYI: Bond markets close at 2pm

2. Trade with the general direction of the Market(Dow Jones Industrial Average)

Rationale: The trend is your friend. Never go against it, chances are that you will lose

3. Always use Limit orders to buy and Stops/Trailing Stops to sell(20%)

Rationale: (a)Limits let you determine the price that you are willing to pay for a particular security/option. Never leave that decision up to the market maker.
(b)Setting stops ensures that you never lose too much on a trade. You will always know ahead of time how much you stand to lose if the trade moves against you.

4. If I am up more than 20% in a trade then reset my stop to cost basis and move up for every 20% gain thereafter

5. 100% trumps all previous rules. If you are up 100% or greater then set a 5% stop and let the trade play out.

6. Dont dwell on losses, it will affect your moral in future trades

7. After two losing trades in a day, STOP TRADING!

Rationale: When on a losing streak, traders tend to become emotional and want revenge on the market/a particular stock.

8. Leave Fear and Greed at the door, Patience is Welcomed.

9. Always use indicators to signal an entry/exit point(5ema/10sma, Stochastics)
(a) Have an entry and exit plan before making a trade.

10. Always follow the rules!!!

Note: These rules may change over time depending on my strategy, but always follow them.

4.17.09 - 5.6.09

Yes, I have been slacking on the blog posts but I have still been trading this account. View below the screen shot of recent activity on the account.


During this period you'll notice that I lost more than I won but still stuck with my motto of "Never lose big, win often". The total gain was 122.98 and I have one open position, which is the BAC(Bank of America) May 12.50 Call. I bought 9 contracts @ .93 which comes out to be $837 + fees and commission. I decided to go with the may 12.50 Call because BAC was building up a lot of momentum based on speculation about the stress test results that are coming out tomorrow before the market closes. I suspect that BAC will not need anymore capital, as the media has been suggesting or if they do need capital, it wont be as much as the media has reported and they can easily raise it by way of converting preferred stock or selling assets. The option ended up closing at 1.05 which was a quick 10% gain considering my cost basis is at .95. In After Hours the the stock is trading at 13, so if it opens around this price I will expect another 20% gain overnight and I will continue to ride it up but be out before the market closes, because as I mentioned before the stress test result will be out after close and I don't want to risk losing all of my money if BAC doesn't have good results.

Current Acct Balance: 1004.39
This is basically back where I started but with my new strategy I don't see it being difficult for me to get back on track and surpass my previous goals.

I will post my trading rules in another post.

AMZN

I'm in the trade @ 5.20. More details later

Busy Week

I've been a little busy this week so I haven't been trading much, but I will update the blog tonight with my trades for this week.

AMZN(Amazon) is expected to report earnings today after the bell so I will be buying the May 80 Call at 2pm @ around 5.20 and setting a .50 Trailing stop. This will allow my stop price to move with the price of the option as it rises. I hope to be out of this trade before 3:55pm. Notice that I have protected my capital by setting a stop and also not assuming much risk by getting out of the trade before earnings are announced.

Current Balance: 641.11(because of some trades that I made earlier in the week)

Stopped out

I was stopped out of APVEE(APPL May 125 Call) today @ $5. Still haven't completed my rules yet but I will post them as soon as I feel they are ready to implement.

Current Balance: 614.62

Terrible Week

After being up more than 100% this week I ended up losing more than 50% of the portfolio. That doesn't matter though because I definitely learned a lot from the sequence of events over this past week. The most important lesson to take away from this is to NOT BE GREEDY. When I saw the portfolio up 100%, for some reason I didn't take it. I felt that since the market went so far in my favor that it would offer me more than what it had already given me. WRONG! That was me becoming emotionally attached to the trade and that is the worst thing that you can do. It is said that becoming emotional is a sure way to lose and I proved.

I order to protect my money, from now on I will be following a strict set of rules(which will be drafted this weekend) and setting trailing stop orders for every trade. This way, in the event that I'm up 100% I won't have to worry about a positive trade going bad. I will also be closing out my positions on a daily basis, with the exception of a few long term trades.

Yesterday(Friday 4.17.09), I purchased 1 contracts of the AAPL May 125 Call(APVEE) for 5.80. A total transaction of 593.74. Although I have been getting burned on earnings all week, I know where I went wrong and will be sure to correct that with this trade. In the event that AAPL runs up on Monday and I see more than a 20% gain, I'm out(I will go over my news rules in the post that I plan to write tomorrow). FYI, AAPL is scheduled to release earning on Tuesday 4.28.09. This may end up being a longer term play, depending on how the technicals look next week. I will also go over my technical analysis on AAPL tomorrow

I'm embarrassed about posting this but, below is the Balance and transaction history for this week.

Current Balance: 699.37
For those who want to learn to be emotion free in their trades, let me know and I will send you a copy of "The Secrets To: Emotion Free Trading" by Larry Levin. Its a great read and I recommend that everyone take a look at it

Sold HIG May 10 Call HIGEY

Sold the HIG May 10 Calls for a little more than cost basis. More details to come later....

Portfolio Update/This weeks picks

I pretty much got slaughtered last week in my short positions but was able to make a few good trades to keep my balance near 2k. View the screen shot below of my trades for last week:

The (AA)Alcoa Strangle was a total loss. The stock ended up not moving at all and time decay was eating away at my options. Note, I currently have two open positions, RIMM and HIG, both of which have been performing pretty well. I will probably sell those tomorrow to free up some cash to play earnings.

Being that I consider all earnings plays to be speculative, All of my picks for this week are spec.
I hope we all understand how important this week is considering it is a big earnings week and also options expiration week. The Out of the money options will be extremely cheap because time decay has run its coarse of them and with earnings this week I could make a lot of money if I play the right side of the fence(i.e. the Apr 55 Call for JNJ @ .08 could easily hit 1.50 if JNJ pops on earnings....JNJ currently @ 51.41).

This is what I will be watching and possibly playing this week. I don't advise that anyone make these trades with their personal money without doing your own DD(Due Diligence).

Monday
Talbots(TLB) - Price 4.11 - Buy Apr 5 Call @ .10

Tuesday
JNJ - Price 51.41 - Buy Apr 55 Call @ .08
GS - Price 124.16 - Buy Apr 125 Call @ 5.35
INTC - Price 15.99 - Buy Apr 17 Call @ .16 and/or Apr 15 Put @ .19

Wednesday
BTU - Price 28.00 - Buy Apr 29 @ .95

Thursday
JPM - Price 32.38 - Buy Apr 32.50 Call @ 1.87
HOG - Price 17.74 - Buy Apr 17.50 Put @ .80
LUV - 7.35 - Buy Apr 7.50 Call @ .30
PH - 39.13 - Buy Apr 35 Put @ .40
PPG - 44.99 - Buy Apr 45 Call @ 1.40
GOOG - 371.75 - Buy Apr 380 Call @ 10.85

Friday
C - 3.02 - Buy Apr 4 Call @ .07
BBT - 20.06 - Buy Apr 20 Put @ 1.00
GE - 11.41 - Buy Apr 12 Call @ .31
MAT - 13.37 - Buy Apr 15 Call @ .10


Unless the underlying hits these strikes tomorrow, we should see a sharp decrease in their prices. I didn't post any technical analysis for my picks this week because earnings will trump any technical indicators, so basically they don't matter. The only thing that matters is whether or not the company beats expectations.

Current Account Balance: 1910.37

Portfolio Update

Yesterday was a bad day for my portfolio. It was the beginning of earnings season and the market was down as a whole. I was however, able to make a good trade. I purchased the HIG May 10 Call @ .45(HIGDY) and so far in Pre-Market trading HIG is up over 29% which is more than a 100% move in the option. Being that options don't move in premarket I wont know my gain until the market opens at 9:30a. IF you are wondering why HIG is up so much, it is because the treasury has decided to extend TARP money to Life insurers, including HIG(Hartford Financial Services Group).

RIMM was hit pretty hard but the uptrend is not yet broken. I won't sell the RIMM option unless the underlying stock falls below 59, which I doubt will happen. On the upside I will sell as the stock approaches 70.

AA is up 4% in premarket, so I will more than likely sell the week leg of that trade which is the April 6 Put(AAPJ). I will realize a loss on the Put the but the Call(AADK) is up, so a profit is still made. All in all, The AA straddle turned out to be a bad trade because it didn't make the big move that I was expecting. Hopefully my next earnings play will work out better.


Below are my transactions so far for the week:
Balance as of 4.7.09: 1734.36
I will also post my balance at the end of the day to show how easily money can swing and also since all of my positions are currently up in premarket, the above balance is not an accurate depiction of the acct balance.

HIG Trade

I will probably be buying HIGDY(HIG April 10 Call)....More details to come later...

Alcoa(AA) Strangle

I decided to implement a strangle strategy instead of a straddle for my Alcoa(AA) trade. A strangle consists of buying a call and a put with the same expiration at different strike prices. I did this because I feel that AA is going to make a big move after earnings are announced, so I want to benefit from the swing in either direction and the volume on the Out of The Money(OTM) was way higher then the ATM strike.

This is a play on earnings, so I have no technical reason for this trade. FYI...AA earnings is the kickoff for earnings season, so I will be implementing a lot of strangles and straddles.

Below are current positions in the account

Account Balance: 2335.35

4.6.09 Trade

I'm going to jump back into RIMM. There is a big bullish engulfing pattern on the daily candle sticks and the daily/weekly MACD and Stochastics say that it is a go. As I was writing this entry I put my buy order in @ 4.55 for the 3 contracts of the May 65 Call(RFYEM).

Daily Chart: On the daily the next line of resistance is the 200SMA which is at 71.04 and the 5 period EMA is still above the 10 period SMA

Weekly Chart: On the weekly, the next line of resistance is the 50 period SMA, which is at 80.25

Based on the above 2 charts, I will monitor the stock and possibly sell the option when the stock reaches 70 or 80

Order:
Total Transaction: 1380.24

Account Balance: 2278.83(the balance is higher because the option has gone up before I was able to finish this post)

Possible Trade

I'm thinking about buying Alcoa for earnings. Ticker is AA. I would buy the 7.5 Strike prices for April. I haven't decided whether I'm going to make the move yet. Current price of the stock is 7.87 in Pre-market trading. More details to come...

April Goal Accomplished

My apologies to those who have been following my blog for not posting my trades for this week. It ended up being a pretty good week overall, even though I was down over 50% at one point in the week.
View this weeks transaction history below:

As you can see in the screen shot above, I lost early in the week being that the market began to rally on the news that Banks would start implementing Mark-to-Market accounting, which would free up a lot of cash on their balance sheets. That being said, I closed my short positions in APC and BAC and just took the loss.
However, the week took a positive turn when I decided to play RIMM because I knew that they were going to be announcing earnings on Thursday. One thing that I have noticed in this recession is that people have not stopped buying Blackberry's(RIMM product), so I assumed that they would beat estimates on their earning and I was right. The RIMM trade ended up making me about $1300(over 200%). The only mistake that I made with that trade was that I became emotional during the day and decided to take profits when I should have just stayed in the trade until earning were released. As you can see in the transaction history above I checked my emotions later in the day and jumped back into the trade before the company announced earning.

Current Account Balance: 2249.07 (beating the April estimate on my Million Dollar timeline by 749.07)
Being that the account balance is over 2K I am now able to trade on Margin(low interest loan from the broker and only charged a fee when margin is used), which will allow me to trade with 6189.52. Based on how many indicators I have going in my favor, I may use the margin on some of my technical trades but for speculative trades I will continue to use my cash balance.

I will post my trades for this upcoming week, either tonight or in the morning before the bell.

Speculative Trade

I decided to use the remaining cash in the account to make a spec trade today by buying 3 contracts of the BAC(Bank of America) May 5 Put(BYOQE) @ .84. I have no technical reason for making this trade other than the fact that I think big banks will be trading their 52wk lows before May, hence the reason why I am saying that it is a spec trade.
Total Transaction: $267.24

Current Balance:
Note: It is not good practice to use all of the cash in your account to make trades or to over trade by using a large portion of your cash on one trade. Generally I keep 20% cash in my personal portfolio. I am using all of the available cash in this account because it is a small amount. Once I get this account near 5 - 10k, I will use a more sophisticated approach to making trades(i.e allocating a certain percentage per trade and keep 20% of my cash available)

Million Dollar Timeline

At 50% return per month
Principal	Month #	Month/Year
$1,000.00	1	Mar-09
$1,500.00	2	Apr-09
$2,250.00	3	May-09
$3,375.00	4	Jun-09
$5,062.50	5	Jul-09
$7,593.75	6	Aug-09
$11,390.63	7	Sep-09
$17,085.94	8	Oct-09
$25,628.91	9	Nov-09
$38,443.36	10	Dec-09
$57,665.04	11	Jan-10
$86,497.56	12	Feb-10
$129,746.34	13	Mar-10
$194,619.51	14	Apr-10
$291,929.26	15	May-10
$437,893.89	16	Jun-10
$656,840.84	17	Jul-10
$985,261.25	18	Aug-10
$1,477,891.88	19	Sep-10

It can be done...

Closed First Position

Today I closed my short position in APC(April 35 Put) by Selling to Close @ $1. The reason I did this is because the position moved against me initially when I wasn't patient enough to wait for confirmation from the MACD and time decay began to eat away at my potential profits. I'm still very bearish on this stock so I'm going to roll forward, which simply means that I'm going to buy another option of the same underlying stock but in a different month. This is done to avoid time decay.Account balance after this transaction is $1288.02.

My exit strategy is pretty much that same for APCQG as it was for APCPG with one minor difference. APC broke through the 38.2% Fibonacci level that we calculated last week(38.98) with pretty good momentum. I will hold off on setting a sell order for now and just monitor the stock as it approaches the 50% level(37.44).

Here are the details of the roll action: Purchase(Buy to Open) 5 contracts of the May 35 Put(APCQG) @ 2.00. Commission was 16.74. Total Transaction: $1016.74


Before I could finish writing this blog entry APCQG went to 2.10/contract.

Current Account Balance: $1321.28

Watchlist

RIMM, Sentiment: Strong Buy, Current Price: 45.01
YHOO, Sentiment: Sell, Current Price: 13.18
CKSW, Sentiment: Buy, Current Price: 3.81
AAPL, Sentiment: Buy, Current Price: 106.85

Portfolio update 3.27.09

My short position in APC is looking better by the day. Oil is retreating with the broad market and currently APC is down 5%. If it stays this low then the uptrend has officially been broken and I will then ride this down. On Monday I will be able to tell if this was indeed a good trade. An important part of trading is being able to watch your money walk away from you while still being follow the technical indicators and understand the dynamics of the market. This trade is one that most people would have sold as soon as it turned against them, being that it usually doesn't behave this way(i.e. on 3.20.09, it disregarded the bearish engulfing pattern on the candlesticks and continued to rally). So far, so good. More updates on Monday.

Current Balance: 814.27

Portfolio update

As it turns out. I did get into this trade too early. Today the candlesticks formed a Harami, which is a weak bearish reversal pattern, but a bearish pattern nonetheless. View Chart below:


I also received a notification from E*Trade today stating that my trade was posted as being executed at .75 but this was an error. the actual price that I paid for the Put was .7...doesn't help much but its better than nothing.

Now, earlier in the week I calculated the Fibonacci retracement levels for APC but being that the stock has hit a new high since then I will need to recalculate. Based on a High of 43.89 and a Low of 30.88, the new levels are as follow:
38.2%(38.98) 50%(37.44) 61.8%(35.89)

Note that I will also be changing my contingent sell order based on the new numbers. The lower you set the order, the riskier the move becomes. I wish to assume the least amount of risk in this position by setting my order based on the 38.2%(38.98) level. If the stock approaches that number with decent momentum then I will adjust the order accordingly.

Total Transaction is now 791.24, 208.76 in cash.....

First Trade Update

Either I jumped into this trade a little early or I will have to chalk this up as a bad trade tomorrow. I ended up getting 11 contracts of the April 35 Put(apcpg) @ .75. More updates to follow.

First Trade

Great news, the Etrade account is open and funded. So I am ready to bust this first move on my way to a million.
Balance: $1000.50(The .50c is from the verification deposits that were made by my bank)

I've been searching all weekend for a good stock/option pick for my first trade with this portfolio. After going through hundreds of charts I've decided that I am going to trade the option for APC(Current Stock Price - 40.69). I have already enter an order for APCPG, the April 35 Put, Current price - .81::Bid - .80::Ask - .85:: Gamma - .035:: Delta - .189.

Rationale:
APC is one of the few stocks that I have seen in these times that actually abides by the candlestick indicators. The huge bearish engulfing pattern on the candle sticks would indicate that the stock price is going down. Be careful when following indicators because news trumps all technical indicators. If the company were to come out with some great news then the price would probably rise and it would hurt our position.

1. APC has been channeling around its 50 day SMA since November.
2. Bearish Engulfing pattern on the Candlesticks
3. %K stochastic has crossed below the %D
4. Commodity Channel Index is signaling to sell.
5. we will disregard the MACD in this case because it is known to be a lagging indicator. By 9:30am Monday morning I suspect it will be indicating to sell as well.

Exit Strategy: According the the Fibonacci retracement this stock should retrace back to 34.70(50%). If it breaks through 34.70 then it will retrace down to 32.54(61.8%). I am going to play it safe on this one and set a sell order when the stock reaches 35.00.

Basically the order flow is like this:
1. Buy to Open...11 contracts...APCPG limit .85
This will cost me $935 + 21.24 in commission/fees(My E*trade commission is 9.99 + 75c per options contract). Total Transaction: $956.24. This leaves $44.26 in cash.


2. After the order is filled I will enter the contingent order as follows:
a. If the Bid price for APC is less than or equal to 35.00 then sell to close APCPG @ Market.
The only reason that I am selling the option at market is because I'm not sure what the exact price of the option will be when the stock reaches 35. The equation for pricing an option factors in Time and Volatility which are hard to predict. Based on the past movement of this stock I believe that I will be holding this option until about April 13th. Without factoring in time and volatility this option should be trading around 2.59 on the 13th of April, assuming that the underlying stock is at 35. So I am predicting that our account balance should be around $3000 by the middle of April.

I will update the blog again with the actual price that the stock was purchased at 9:30am when the market opens.




Disclaimer: I am not a professional trader nor am I qualified to give financial advice. The stock picks that I post to this blog are for educational purposes and/or my benefit. Do not jump into the same trades as I do without doing your own Due Diligence.

Welcome to My Blog

Welcome to my first blog. This intention of this blog is simple, I want to show those who are interested, how easy it is to make some extra money or build wealth by trading the financial markets(whichever you choose to do). I've never been the greatest teacher and don't really discuss my finances with too many people, so this blog is the closest that I will ever come to sharing my views on wealth building and how I handle my personal funds to ensure that I never have to rely on a paycheck to get by. I am also not a writer so this may not be the best blog that you have ever read but hopefully you will see "the picture that I am painting" through discussing my daily positions and rationale for making certain stock picks. For those who have never traded before....great, I hope you learn something here. For those who already trade.....great, maybe you can give me some tips to help me on my road to a million.

I am not a professional trader but I have been trading the markets for some time now and have been pretty successful. I don't always win but my motto is: "Never Lose Big, Win Often". It would be virtually impossible to always win in the stock market. For the most part I am a technical trader and use Japanese candle stick patterns, MACD, Full Stocastics, Volume, the 20-50-100-200 Simple Moving Averages, Chaikin Volatility, Fibonacci Retracements and sometimes Bollinger Bands as my indicators. You're probably thinking that those are way too many indicators to follow. This can be overdoing it but I use different indicators for different reasons. We will probably get into that as I start posting my daily/weekly picks.

Here's how this blog is going to work. I will be opening a new Account with E*TRADE(where I have my current brokerage account) and deposit $1000. With this money I will be trading stocks and options and will post my every move so that others can see exactly how I make my money work for me. I will always post my picks before the market opens at 9:30am so that there is no discrepancy as to whether I really made a particular trade or not. It would be very easy to lie about what I traded after the fact and that won't be happening here. If I post it then I'm really trading it with REAL money. Throughout the day, if I decide to sell I will also post that as well along with my rationale for selling, just so that we are all on the same page.

Below are a few websites with great information that will help you along your path to financial freedom through trading stocks and options:

All you need to know about options strategies - http://www.theoptionsguide.com
Free online Webinars from ETRADE and The Market Guys - https://us.etrade.com/e/t/toolsandresearch/onlinewebinarsandeducation
Lots on investing Stuff - http://fxwords.com/

Look forward to my next post on Monday before the bell!