A Trade A Day

It’s that time again.

Trading blogs are a fun niche, but their appeal to the masses is limited. I’m always looking for ways to promote my blog. Caroline shares some valuable insight with 7 way to connect with people in your nice.

Corey shares 6 tips to asses the significance of price patterns

The market speculator has a game plan for trading a queezy market.

Got rentals? The Frugal Trader has a post that could save you thousands of dollars by learning to screen tenants.

TraderBubs can read my mind. This should give you a clue what I’ll be drinking this weekend.

BTW, I’m adding milliondollarjourney.com and thestockbandit.net to my blogroll. Should have done this a lot earlier as I frequent theses blogs and they always have great content.

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Investing for a living is a dream for many people. The freedom from the rat ace. The opportunity to make your own hours, to control your own destiny. The ability to pull money from the market like it’s your own personal ATM. Well, maybe not the ATM part.

However, in order to get started you need capital. How much capital depends on who you ask. Throughout market history there are stories of traders who started with a a minuscule bank roll and turned it into a fortune. Traders like Richard Dennis and Jesse Livermore started with a grubstake and a dream.

The point is you need capital. Whether it’s $250 for to open a forex account or a couple of million to start a hedge fund. There are ways to get capital. Here are my top 5.

5. Bum it off a relative.
There’s a couple of ways to do this, but I would recommend pitching it like a business proposal. I actually acquired my first trading stake through this method. In my case, I created a business and trading plan and presented it to my relative. He thought it was a great idea and I got funded. Then I lost it. So I asked him if I could have more. Which I then preceded to trade into oblivion. If you’re going to try it this way, make it as formal as possible. Create a business plan including milestones to pay back the loan. Chances are you will lose your entire stake, so consider it before asking Aunt Betty for the cash. How will your relationship suffer after you’ve blown cousin Gertie’s hard earned money on your stock market dream.

4. Credit Cards and Bank Loans.
As an American, I’m very much into immediate gratification. Credit Cards and Personal Loans through your bank are a great way to get cash now. And for the astute trader there’s a second added bonus. Credit cards require that you achieve. Consider that to keep up with the 30% interest rate they will charge you, you’re going to have to trade better than a Turtle to keep afloat.

3. A second mortgage.
If trading wasn’t such a losing proposition for most would be traders, I would actually be serious by suggesting this. Interest rates are typically lower, and the equity you have built up could be enough to actually make a legitimate start. But like I said trading is a losers game. Most will fail, and do you really want to face the Mrs and explain that you blew the nest egg on cocoa options?

2. 401K or IRA.
I trade my IRA right now. Of course I can’t “make a living” off it. I do think that everyone should learn to be proactive with their retirement account. Whether it’s active trading or buying an index fund, if you can’t trade for a living try focusing on making good investment decisions with your retirement.

1. Work for it.
Sorry, but if you really want to trade, you should start saving money from your current income. It is the best way.
Why? Because you will not value anyone else’s money more than your own. All the other methods of acquiring trading capital add stress. True, you do not want to lose the money you’ve made, but the fact that you made it should give you confidence that you can make more if you need it. You have no one to answer to except yourself, and you will do a better job of research, and execution because it is your money that you are trading. Not making enough money? Get a second job whose earnings are specifically for your trading account. Consult, start a blog, write a book. There’s lots of ways to earn some extra cash. Learn to spend less and save more. Consider it training for those streaks when you aren’t making much. Macaroni and hot dogs never tasted so good.

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The market pullback over the past couple of days caused a couple of my longs to stop at breakeven. In my opinion, It’s an issue of timing. The market corrected. The timing didn’t work out and I got stopped. I can accept that because I followed my method. My trades didn’t work out the way I wanted but that’s normal. In fact, it’s expected that most of the time they won’t work out.

Every trade I post and every potential trade on my watchlist, I think, is a good trade. But they don’t all end up making money. I have to cut them when they fail. I think it’s common knowledge by now, that losers should not become bigger losers. As traders, we keep our losses small, but what about when good trades go bad? What should we do when we’re riding a winner that’s flashing sell signals? We know we should get out, but sometimes we bend the rules and hang on.

There are tangible, account-saving reasons for cutting our losers. Jeff White at thestockbandit.net wrote an article on when good trades go bad. Jeff outlines some of the benefits we can reap from cutting out losers. It’s worth a read.

Too often traders fall into the trap of measuring their worth and ego on the results of their trades. When we fall into this trap, covering our losses becomes more painful than it should. To combat this, I grade the quality of my trading decisions to stroke my ego and boost my self worth. Did I follow my rules? Did I cut my loses short? When my method said sell, did I sell? When the market did turn, did I act on my buy signals? True, the bank won’t take “quality decisions” in lieu of a mortgage payment, but I can assure you that quality trading decisions will do more for your bank account over the long term than the results of your last couple of trades.

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On 9/17, I signed up for the Blogrush syndication network. It was an effort to boost traffic and kick start my blog. Well, I earned thousands of syndication credits and put up with over a month of outages to earn maybe a couple of clicks to my blog.

Now Blogrush has seen fit to boot me from their network. Supposedly, I didn’t meet their “strict content guidelines”. Let’s take a look at their “Dear John” letter and see where my blog didn’t make it.

We regret to inform you that your BlogRush Account has been made INACTIVE because your blog did not pass our Quality Review criteria. You will find instructions below for making your account active again.

You will notice that the widget no longer loads on your pages — please remove the BlogRush code from your blog for now.

We recently reviewed your blog(s) located at:
http://www.atradeaday.com

We determined that your blog did not meet our strict quality guidelines. Please do not take this personally but realize that we must abide by a very strict set of quality guidelines.

Oh geez, I’ve heard this before in highschool. “It’s not you…it’s me”.

If you feel you have made the necessary changes to your blog(s) to meet our guidelines, you can resubmit your blog(s) for review after this date:
Wednesday, November 21, 2007

No thanks…

Below is a complete list of our quality guidelines…

BlogRush Quality Guidelines:

- The blog contains unique, quality content that provides opinions, insights, and/or recommended resources that provide value to readers of the blog. Articles, videos, public domain works, press releases, and content written by others are okay to be used on the blog, but the ratio of unique content should far outweigh content from other sources.

All my content is unique. The only exceptions are the videos/pictures I post on Saturday.

- The blog should be updated on a regular basis (at least several times a month) and should not just go a few months between posts.

Um, I’ve been posting daily since September.

- The blog should already contain at least 10-12 quality posts. New blogs with very little content will not be accepted.

Yesterday was my 100th post, thank you.

- The blog’s primary contain must be in English. BlogRush is currently not available for non-English blogs.

Baise mon cul, I think this blog is in english.

- The blog should not contain an excessive amount of advertising and links and very little actual content. The focus of the blog should be quality content.

No advertising here…

- The primary content of the blog should not be “scraped” content from other sources and/or script-generated pages for the sole purpose of search engine rank manipulation. The focus of the blog should be quality content.

Original content daily…

- The blog’s content (or advertising) should not contain any of the following types of content: hate, anti-racial, terrorism, drug-related, hacking, phishing, fraud, pornographic, nudity, warez, gambling, copyright infringement, obscene or disgusting material of any kind, or anything considered illegal.

Did I post anything obscene?

Best Regards,

The BlogRush Team

Whatever…ah, that felt better.

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Market action over the past week has indicated that it’s not an appropriate time to initiate new longs. Where this correction is going to end is difficult to say. What matters to me is how to play this movement and make money.

The first thing I’m going to do, like I said earlier, is not to put on anymore long positions until the pullback is complete.

The second piece of my strategy is to identify shorts. I’ve already begun some preliminary scanning this week, and I wanted to share some more of my ideas.

I always am scanning both long and short candidates, but usually only trade one side at a time for obvious reasons. In the case of today’s market I want to have long candidates in case the up trend resumes and shorts in case we see a new down trend.

But how do you know when it is ok to go short or long? When do you know the trend has really changed? Well, my answer is you never really know until the trend is established. By then alot of the good trades, where a lot of money could be made, have already passed you by.

Trading doesn’t come without risk. If you want reward you have to risk something. Looking at the pullback today, at a minimum I see a short term correction. This is enough for me to test the waters and start throwing money at shorts. I won’t be trading at full size, but I use the market to tell me that short trades are going to work. The only way I can do that is by putting some money at risk. The only risk acceptable to me is to trade at 25% or less of my full position.

So if I do catch a down move how am I going to make any money? Well, I scale in. I sell more and more as the stock moves lower untill I have all my risk management plan says I can sell. I never am fully positioned at the true beginning of moves, but I am able to get most of the run with an acceptable level of risk by scaling in.

Now let’s take a look at some stocks that I like.

Notice a pattern? Can you tell what my setup is. These leaders have all see strong down days and are now consolidating. I will start shorting the first break of their consolidation following their long red candles.

Good Luck! See you tomorrow!

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