Friday, May 8, 2009
Thursday, May 7, 2009
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
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 tonightCurrent Balance: 2282.38
Wednesday, May 6, 2009
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.
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.
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.
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