Fun Rants


Why I like trading stocks rather than investing in them.  That's pretty much what this section is designated too.  It's a chance for me to rant and help explain why I am choosing to be a trader rather than an investor.  We can call this page my free therapy section.  You guys can be by psychiatrists.  Thanks!

See my trading stats here


6/1/14


       Right now in my life my cash flow is pretty insignificant. If I lose a few thousand dollars, even five or ten thousand dollars, sure that would suck but it wouldn't ruin my life. Some of the best investors in the world generate a rate of return around 15% a year. Anything over 20% is something to celebrate, and closer to 10% is more average.  Let's say I find out I'm actually great at investing and can make that amazing 20% a year threshold. I started out with a portfolio of stocks valued at about $3,500. I personally put about 50 hours of research into each security I owned, and at the end of the year I am rewarded with $700, instead of the $275 loss I actually had. I would have made $700 in one year.  Big whop. The opportunity cost of my time is valued at much more than $700/year.  I dont know about your time, but my time is very precious to me -- I barely even sleep 6 hours a night. On the other hand, the percentages traders can make do not have a limit.  It is truely amazing how high they can be in one year.  Here I am with two weeks of part time trading under my belt and I am up $355. I have not risked more than $1,000 of my account at any one point in time.  That's 35% I have made in two weeks of PART TIME trading. Sure, you live and die by the sword in trading and technically it can all be gone tomorrow, but if you are trading well, cutting losses quickly, being meticulous, sticking to rules and strategies and NOT hope, I believe in and I have seen this type of success continuously. I am much more impressed with how well I am playing each trade rather than how much I am up. It's amazing what you can do if you just put the odds on your side.  My position sizes are also very small at this time.  Trade well and the profits will come, and build that account up exponentially.  One day you will be making 35% in two weeks on something much larger than $1,000.  That right there, ladies and gentlemen, is the real american dream. 

       This one's good.  There is news that Carl Icahn, you know that billionaire investor, billionaire with a B, along with Billy Walters and Phil Mickelson, two very well respected and successful people in the professional golfing world, are being linked to an insider trading inquiry.  The SEC is examining the timing of specific trades based on possible leaked information by Icahn.   The SEC hasn't filed any charges as of now, but that's not what is important to me.  These are the people that I am not trying to play against!  One particular stock they are looking into is a $50 stock.  These stocks are targeted by "smart money" (mutual funds and millionaires), as well as most of the average retail investors who are looking for a bit of financial security.  The stocks I am looking to trade are all small cap stocks, not covered by wall street, not in mutual funds, and not looked at by "smart money".  So who does that leave?  You got it, "dumb money."  I want to play against "dumb money".  Blue chip companies such as MSFT and GE do not significantly increase percentage-wise like small cap stocks do.  Investors who own stocks in Blue Chip Companies are ecstatic if they can get 10% a year on their money. Small cap companies, NEWL for example, went from 0.36 to the 4.70's in just six trading days.  DRL went from 1.87 to 4.47 in just three trading days.  IGC went from under 1.00 to 2.34 in just three trading days.  Those are just to name A FEW from within THE LAST 20 DAYS.  Don't you think you could figure out a way to at least catch a tiny bit of those 100 plus percentages?  I mean the stocks are giving you multiple DAYS to get in.  At the time of this writing, I haven't held a stock for longer than 16 minutes (market-hour minutes).  Or, you can be happy with that 5, 10, and 15% a year return on your money.  That's fine if that is how you would like to invest because that is how you feel most comfortable.  Just know that there is a whole world of people out there making 5, 10, and 15% every trade they make!  This is how they make a living.  This is just another career choice.  This is not as crazy as you might think.  Investing with the mind-set of beating Carl Icahn, George Soros, and Warren Buffett, or even coming close to their whopping 20% a year is what seems crazy to me.



       Here's one of the things I love most about trading.  The stocks I have traded I did very minimal research on.  In the past I have put 50 hours of research into a stock before I bought it, now it's more like 5 minutes.  Once you learn technical analysis, that's it, you have learned it.  Sure, there are several combinations of technical indicators and strategies you can use, but the fact of the matter is you don't need all of them.  You only need the ones you are most comfortable with.  Even better, sometimes basic support and resistance levels are the best indicators.  Not the Chaikin Monkey Flow or the Percentage Price Oscillator.  In my opinion, the most useful thing a trader can learn is how to read level II quotes.  Level II quotes show the bid and the ask (buy and sell) orders.  It shows the price buyers are waiting and willing to buy at and how many shares, the price sellers are waiting and willing to sell at and how many shares, as well as a running tape of all the orders that are being executed real time.  Picture these three lists constantly updating.  This is called the price action, and learning to guess a stock's price direction based on this price action can be very profitable.  Many traders are simply looking to find a stock showing strong price action that is testing a key resistance point, a recent point that it has failed to break several times.  This draws attention to the stock.  Preferably, the stock would have heavier volume because of some type of news catalyst recently released; and all we really care about is the reaction to that news catalyst.  You do not have to dig into annual reports.  You do not have to research the company's Board Of Directors. You do not have to see how many buy recommendations Wall Street is issuing on the stock. You simply need to play the price action by anticipating the move and reacting to how the chart plays out once you have a position.  Once you can learn how to do this it's like riding a bike, you cannot forget it.  Leaning it however, is a bit more difficult than riding a bike, so you better get to studying!

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