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!