Not Forgetting my Trading Strategy
I had purchased ExxonMobil recently at $76/share and my goal was to sell it for $77.52 or higher within a month. I sold my Exxon stocks in 15 days at $80.79/share, for a profit of 6.3% in just 15 days. I hope to use this trading strategy repeatedly to continue to get gains similar to this.
From now on, I will share the progress of my Zecco account and compare its performance with that of the market. This is the account I will use to trade actively. I will not share all the positions I hold in this account, but will keep updating it’s worth and also discuss some of the more exciting transactions that I make.
As of now, this is how the numbers look (as of 9/22/2008, 3:43 AM):
Total value of my Zecco account: $3609.66
DOW: 11,3884
Nasdaq: 2,273.90
S&P 500: 1,255.08
September 22, 2008
Posted in: Strategies 
No Comments
What is the RTC II?
After a really bad week, the DOW Jones Industrial Average (.DJI) recovered on Thursday and Friday closing down only 50 or so points for the week. This is rather odd for a week like last week when Lehman Brothers filed for bankruptcy protection, Merrill Lynch was acquired by Bank of America and AIG was bailed out by the government. Last week did not end miserably low because investors gained confidence in the market as the government announced new plans of rescuing banks from their current financial debt.
There were talks about bringing in a system similar to the Resolution Trust Corp (RTC) in 1989. I was only 2 when that happened and needed to look it up to get a better idea of it. From how it looks like now the government will put in about half a trillion dollars into a system through which private wealth managers would purchase bad-debt instruments for the government. The government would hold onto these instruments for a few years, until the economy recovers and then sell these for a profit. This kind of a resolution will help banks from avoiding writing off bad debt, by instead selling it to the government at a discount. The question for you and me is, who is going to pay for this? The government cannot just print money and will get all this money from the tax payers. Even though this sounds crappy for us tax payers, I believe this is good for us in the long-run. These deals that the government is making are great deals. The government is acquiring assets at a good price and should make a good profit off of these in the long run. The money will hopefully come back to us once the economy is doing a little better.
Another step the SEC took last week was to ban short selling on several financial stocks. This move was adapted by several countries globally as well. This is to keep investors from manipulating prices and driving down stock prices.
This brings me to wonder about where the market is headed? For short-term, I think the market will do fairly well for a few days, however the overall situation is still really bad. I think the correction in housing prices isn’t complete yet, and the values will still go down more. We might even be hit with other unexpected pitfalls such as widespread credit card defaults. I will be looking to unload my stocks in the next few days (if the market does well), and then wait for the market to drop again, when I will buy again.
I just want to end by saying that these are scary times, but I am glad to be around to understand and learn from these. I am going to be following the happenings around me very closely and will continue to write about what I see and learn.
September 22, 2008
Posted in: Current Events 5 Comments
Investing in LEH?
It’s not much of a risk with the price LEH is trading at. I decided to pick up a 160 shares of LEH (Lehman Brothers) in the hope that the price might jump back up with Barclay’s acquiring a portion of it. I don’t mind losing $40 if it comes down to that, but if I do gain, I could gain a lot.
September 16, 2008
Posted in: Investing No Comments
Zecco Down as of 9/8/2008 10:34 AM EST
That’s the error I am getting when I try to log into Zecco this morning. This is really bad, specially for a day when the DOW is up about 250 points. For short term investors this is the time to unload and such poor service from Zecco is definitely not helping. I really hope that this is a rare occurrence, or I will be really unhappy about my switch over from Scottrade.
September 8, 2008
Posted in: Brokers No Comments
ExxonMobil for Quick Money
I am still waiting for my Scottrade account to be transferred to Zecco and that means no $0 trades from Zecco yet. I was going to wait till the transfer was complete to start working on my 2% strategy, but decided against it today because of how much the market has dropped this week. I have been following and trading Exxon Mobil Corporation (NYSE:XOM) for over a year now and really like this stock. Recently, XOM has been fluctuating a lot because of the insecurity with gas prices, therefore making it a good stock for a quick gain if it is bought at the right price. Overall, Exxon is a very strong company with a fortress balance sheet and very strong credentials. Based upon my previous experience with this stock, some more research and the current market conditions, I picked up 23 stocks of XOM today at $76.00/share. For a 2% profit on this, I would need to sell it at $77.52/stock. I also will incurr a $4.50 comission to buy and sell, and therefore to gain 2% on this position, I will need to sell it for $77.91/share.
This seems very doable and I will continue to monitor this stock to make sure I don’t lose more than 2% on it if it’s downward trend continues, and if it does increase, then I will set up a stop loss to insure I get at least a 2% return on it.
September 4, 2008
Posted in: Investing No Comments
Taking the Emotion out of Trading
One problem that a lot of traders, including me have is they let their emotions interfere with their trading. The emotions I am talking about here are greed, fear, and optimism. When our stock is going up, we do not sell because we think it will keep going up, and when it’s going down, we don’t sell hoping that it would rebound soon. I want to fix this flaw at an early stage in my trading life and this is where my new trading strategy comes into play.
My goal is to split my investments into two different strategies. Half of my trading funds would go towards long term investments. I will buy stocks of companies that I expect would continue to grow with time and would give me a steady return over time. These stocks in most cases would come with a decent dividend as well. The other half of my trading funds would go towards an active trading strategy. My goal is to get a 2% return on my investments every month. This seems like a lot, but I think is very doable. I will buy stocks of reliable companies which fluctuate frequently. I am not looking for a huge return, all I want to do is buy the stock on a day the market is low, and sell it on a day the market is doing better. I get 10 free trades per month with Zecco, so that gives me 5 buys and 5 sells to get a profit of 2%. This averages to a gain of 0.4% per stock, but obviously I will get a higher return on some, and will lose money on some. I intend to use stop loss very effectively to make sure I do not lose too much money on stocks that go down after I buy them, and also to make sure that I do not lose money on a stock that is up at first.
I am very excited about this new trading strategy I have and can’t wait to put it to use, which will be once my ACAT transfer with Zecco is complete. Even if this strategy does not work, I want it to be a learning experience, as I am still in early stages of trading in my life and am looking to learn from everything that I come across.
August 21, 2008
Posted in: Lessons - Practices No Comments