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Showing posts from May, 2019

Course And Heading 05/27/19

It is very difficult to determine the direction of the market so I am maintaining a safe heading to start the week:
No new long positions planned.No new short positions planned.Hold existing positions.Trading Tide Levels:
Mid Tide (S&P closed at 2826 on May 24, 2019 coming off a Low Tide of 2801 on May 13, 2019 and a High Tide of 2954 on May 1, 2019)Spring/Neap Tide (VIX is around 16 this morning)Subscribe to 10KT NewsletterLearn More About 10KT
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This is for informational purposes only and the information provided does not encompass all possible or probable outcomes and nothing posted here is an indication of future results. Nothing in this blog is a guarantee or promise of future investment returns and investing in stocks or bonds carries risks including losing your entire investment. I do not recommend, advocate or endorse any third-party links, resources or advertisements of any kind. Any investment decisions are recommended to be in conjunction with a Certified Fina…

The VIX & The Tides

The CBOE Volatility Index (VIX) is a market index that represents the market's expectation of 30-day forward-looking volatility. A high VIX high volatility and a low VIX = low volatility.

For some perspective, back in December when the market was very volatile, the VIX rose to 36.20. Since then the markets have been much calmer and the VIX has been around 13.

When the VIX is high expect volatility and trade accordingly. Likewise a low VIX might offer a little more stability so adjust your trade accordingly.

Trading Tide Levels:
Tide is moving lower (S&P is approaching the previous Low Tide of 2801 on May 13, 2019)Neap Tide (VIX is at 16.79)Subscribe to 10KT NewsletterLearn More About 10KT
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This is for informational purposes only and the information provided does not encompass all possible or probable outcomes and nothing posted here is an indication of future results. Nothing in this blog is a guarantee or promise of future investment returns and investing in stocks…

Practice, Practice, Practice

I cannot emphasize enough how I need to be prepared to lose my entire investment. Every boat can sink. I cannot trade what I cannot afford to lose. That said, there's a saying "a ship in port is safe, but that is not what ships are built for (Grace Hopper), so if I want to "play in the game" then I must practice while in port.

Practicing while in port is like installing a rudder, engine, sail or simply working on your boat before you head out to sea. You would never set sail without a way to control your boat or keep it afloat, why treat your money any different?

I love movies about underdogs, stories about overcoming adversity and winning despite the odds. It should come at no surprise that I love the Rocky movies. One of my favorite quotes was when Rocky's trainer, Mickey Goldwin, says "For a 45-minute fight, you got to train hard for 45,000 minutes, 45,000! That's ten weeks, that's ten hours a day, ya listenin? and you ain't even trained one!…

UPDATED: New Position: $STLD Trade #100

In accordance with maintaining diversity, I added another position to the $STLD Trade today and the first position will likely be taken out by a STOP-LOSS. Lose money on the first trade and hope to make it back on the second trade. If I can win a few more than I lose and enjoy doing it then I will achieve success. Practice, practice, practice.

Current Low Tide: $27.44

Prior $STLD Low Tides:
December 27, 2018: $28.91October 26, 2018: $38.12Trading Tide Levels:
Tide is moving lower (S&P is approaching the previous Low Tide of 2801 on May 13, 2019)Neap Tide (VIX is at 16.79)Subscribe to 10KT NewsletterLearn More About 10KT
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This is for informational purposes only and the information provided does not encompass all possible or probable outcomes and nothing posted here is an indication of future results. Nothing in this blog is a guarantee or promise of future investment returns and investing in stocks or bonds carries risks including losing your entire investment. I do not r…

Diversify, Diversify, Diversify

I should NEVER put my eggs in one basket! WCOM Trade #4 serves as a constant reminder of this important lesson.

I watch about 50 stocks and funds and target 8 of them to trade. I've found 8 to 10 stocks (24 - 30 "boats" (I will have up to 3 positions in any one stock)) is about my limit in order to deliver a decent return on my effort. The 37 other stocks that I watch but do not target serve as potential replacements for the 8 target stocks.

When I set sail, I diversify by launching several boats/several courses. This gives me plenty of options should the conditions worsen. So let's say the weather and conditions are favorable to launch a cruise (which usually means it is storming at the dock), I dedicate no more than 25% of my trading funds to any one stock or fund.

A good captain weathers the storm he or she cannot avoid and avoids the storm he or she cannot weather (unknown author).

In addition to dedicating no more than 25% to any one stock, I also leave port at …

New Position: $STLD Trade #100

It has been 1,336 days since the last voyage with $STLD. While sitting at the dock, $STLD hit an all-time High Tide of $52.10 on May 17, 2018 but it has also receded to $28.91 since then so a positive return wasn't a sure thing (never is).

This is another classic example of avoiding the "what could have been" psychology as knowing we returned to port (sold a stock) for a modest gain that ended up tripling in price within 968 days after buying it can be quite frustrating. In this case, the $STLD winds just kept blowing and blowing in the same direction and I chose not to chase it.

I have got to have the right temperament if I want sail around the ocean competing for returns. I could have just as easily regretted setting sail (purchasing $STLD) in the high $30s or low $40s during that same time. It's easy to play Monday Morning Quarterback and second guess every decision after things happen. But every trade is unique with different timing, tides, prices, conditions, ec…

The Right Mindset

Throughout my life I've occasionally thought about what it would be like to be extremely financially wealthy but I've never been driven by greed or had an appetite for extreme money and possessions.

I think not driven by greed is important to successful trading (success as defined as low stress, enjoyable and profitable). Of some of the primary contributors  to happiness such as career, money/financial, social/community, health, sense of purpose and entertainment/family, my family has always been by far the key to my happiness.

I think finding happiness from a source other than money/financial is a key to trading stocks. There have been some very "red" trades and dark moments throughout the years that could have been tough to stomach. Fortunately, my emotions have remained very steady whether I've made money or lost money.

Ironically, I do not like to gamble at casinos or bet on sporting events. Despite the fact that I think the stock market is one big gamble, I …

Buying Stock On Margin

Buying stocks on margin is when you borrow money from your broker to borrow stocks. Recently, the interest rate TD Ameritrade was charging was 9%. That is 9% in addition to the commissions and fees you pay to trade stocks.

I've paid a small fortune in margin interest expense over the years and even more in commissions and fees. Subtracting the commissions, fees and margin interest expense and my returns dramatically improve. As such, I tend to try to avoid buying stock on margin as the risk does not seem to be worth the reward. I already pay enough in commissions and fees, having to overcome interest expense in addition to the commissions and fees is really challenging.

Trading Tide Levels:
Mid Tide (S&P closed at 2859 on May 17, 2019 coming off a Low Tide of 2801 on May 13, 2019 and a High Tide of 2954 on May 1, 2019)Spring/Neap Tide (VIX rose to 17.63 this morning after closing at 15.96 on May 17, 2019)Subscribe to 10KT NewsletterLearn More About 10KT
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This is for…

The Fees And Costs Of Trading

When you trade, each transaction typically has a commission fee charged by your broker and when you sell a stock you also typically pay a regulatory transaction fee.

My first trade on January 27, 1999 I paid a commission to TD Ameritrade of $13 to buy the stock and another $13 plus a Regulatory Fee of $0.18 when I sold the stock. Most recently, I have been paying a commission of $6.95 to TD Ameritrade each time I buy or sell and the Regulatory Fee when I sell stocks.

During my lifetime of trading I've paid a lot in commissions and regulatory fees. The hope is that the fees enable me access to powerful trading tools that, in turn, enable me to obtain a better return on my investment which covers the cost of the fees.

Trading Tide Levels:
Mid Tide (S&P closed at 2859 on May 17, 2019 coming off a Low Tide of 2801 on May 13, 2019 and a High Tide of 2954 on May 1, 2019)Spring/Neap Tide (VIX rose to 17.63 this morning after closing at 15.96 on May 17, 2019)Subscribe to 10KT Newsletter

WCOM Trade #4

Ah, WCOM Trade #4

Trade Rank: 104

WCOM Trade #4 began April 29, 1999. The first of 356 purchases was for $83. The last sale was at a whopping price of $1.721 on May 30, 2002 - nearly the entire cost of the stock - OUCH!

I bought and sold it all the way down for 1,127 days. STOP-LOSSES were used several times but as it dropped lower and lower I kept on buying it, each time thinking that each lower entry price was better than the last. Talk about an education by fire! WCOM turned out to be one of the biggest accounting scandals of our time, joining the likes of Enron as a fabrication of manipulated, fraudulent financial strategies that ultimately destroyed shareholders, employees, families and friends.

These scandals teach and remind us to remain skeptical and never trust entirely when you invest your honest, hard-earned money.

Trading Tide Levels:
Mid Tide (S&P closed at 2859 on May 17, 2019 coming off a Low Tide of 2801 on May 13, 2019 and a High Tide of 2954 on May 1, 2019)Spring/N…

Course And Heading 05/20/19

I am maintaining a safe heading to start the week:
One new long position planned (STLD Trade #100).No new short positions planned.Hold existing positions and will possibly exit positions if there is a run up (specifically looking at my Game Of Thrones Trade).Trading Tide Levels:
Mid Tide (S&P closed at 2859 on May 17, 2019 coming off a Low Tide of 2801 on May 13, 2019 and a High Tide of 2954 on May 1, 2019)Spring/Neap Tide (VIX rose to 17.63 this morning after closing at 15.96 on May 17, 2019)Subscribe to 10KT NewsletterLearn More About 10KT
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This is for informational purposes only and the information provided does not encompass all possible or probable outcomes and nothing posted here is an indication of future results. Nothing in this blog is a guarantee or promise of future investment returns and investing in stocks or bonds carries risks including losing your entire investment. I do not recommend, advocate or endorse any third-party links, resources or advertisement…

$STLD Trade #100

$STLD Trade #100

Trade Rank: 2

Average Daily Price Range: $1.01

First purchase: March 12, 2009 @ $6.17.

Last purchase: September 22, 2015 @ $17.099.

Recent price: May 20, 2019 @ $29.66 (up 381% from the first purchase price)

Total Transactions: 207

Total Purchases: 114

Trading Tide Levels:
Mid Tide (S&P closed at 2859 on May 17, 2019 coming off a Low Tide of 2801 on May 13, 2019 and a High Tide of 2954 on May 1, 2019)Spring/Neap Tide (VIX rose to 17.63 this morning after closing at 15.96 on May 17, 2019)Subscribe to 10KT NewsletterLearn More About 10KT
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This is for informational purposes only and the information provided does not encompass all possible or probable outcomes and nothing posted here is an indication of future results. Nothing in this blog is a guarantee or promise of future investment returns and investing in stocks or bonds carries risks including losing your entire investment. I do not recommend, advocate or endorse any third-party links, resources or ad…

REFLECTION: Course And Heading 05/13/19

I charted a safe heading to start the week:
No new long positions planned.No new short positions planned but prepared if the opportunity presents.Hold existing positions (continuing prior established headings) and will possibly sell existing positions if there is a run up. I ended up initiating a position in CAT Trade #48. We'll see how this goes but I'm not feeling confident in the market over the near term.
Trading Tide Levels:
Mid Tide (S&P closed at 2859 on May 17, 2019 coming off a Low Tide of 2801 on May 13, 2019 and a High Tide of 2954 on May 1, 2019)Spring/Neap Tide (VIX closed at 15.96 on May 17, 2019)Subscribe to 10KT NewsletterLearn More About 10KT
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This is for informational purposes only and the information provided does not encompass all possible or probable outcomes and nothing posted here is an indication of future results. Nothing in this blog is a guarantee or promise of future investment returns and investing in stocks or bonds carries risks inc…

Cost Basis: Selecting a Tax Lot ID Method

It's amazing what you can learn when you apply yourself. For years I dealt with the fact that my trading performance did not align with my platform's cost basis tracking. In other words, my trading platform used a different cost basis for gains tracking than I used in my spreadsheets for tracking my performance. Finally, I asked myself "I wonder if my trading platform has another method I can use for the cost basis?"

My trading platform uses first-in, first-out (FIFO) as the default tax lot identification method for equities and mutual funds and I've used their default method my entire trading career. However, I usually sell my lowest cost trades first. Therefore, the two methods were never really in sync. Take a look at the following example: Transaction #1 - Purchase #1 XYZ Shares @ $11.00Transaction #2 - Purchase #2 XYZ Shares @ $10.50Transaction #3 - Purchase #3 XYZ Shares @ $10.00Transaction #4 - Sell #1 XYZ Shares @ $10.50Transaction #5 - Sell #2 XYZ Shares …

STOP-LOSS

Arguably one of the most important and also painful lessons I've learned is the psychology during losing trades versus winning trades and how critical it is to use a stop-loss in order to limit a loss.

A stop-loss is a price you set prior to initiating a trade and if your trade hits that price you are OUT. Here is an example:
Entry Price: $10.00Exit Price "Stop-Gain": $10.70Stop-Loss: $9.30 Interestingly, I almost always hit my "stop-gain" points. Like clockwork, I eagerly sell wins at or near my target exit price when I am winning (in the above example, I'd sell at $10.70 in a heartbeat). But for some reason, selling losses is another story - I sometimes hold them forever to avoid taking the loss! In the above example, the price could get down to $9.00 and I'd think to myself "well, I might as well hold it, how much worse can it get?" or "I don't want to sell it now because as soon as I sell it it is going to rebound and I'll miss…

Avoid "What Could Have Been"

Sports has taught me a lot and one of the lessons is to learn from the past but focus on the future. You cannot dwell on that bad shot in golf (or the many bad shots in my case) or that strikeout in baseball. It is best to remove the "if it only would've" or "I wish I would've" from your mind. The best hitters in baseball fail more often than they succeed.

After copious practice, when you are ready to execute your trade, you have to trust your preparation. If you know the Tide Levels and tendencies and potential Rip Tides and, most importantly, you are prepared to lose money (STOP-LOSS), then proceed with confidence.

I have lost money on paper on almost every single trade before I've sold it. Only a handful of times have I bought or sold at the absolute bottom or top of a range (yep, got lucky). Remember, the stock will likely fall below your purchase price and if it falls down to your Stop Loss then you will be forced to lose the trade. If that happens…

$CAT Trade #48

$CAT Trade #48

I initiated my 13th purchase today of $CAT Trade #48. It has bottomed at 123, 129 and 124 respectively on the last 3 Low Tides. It would have been best to leave port between 112 to 116 with a Low Tide around 2722 but $CAT Trade #48 has been so consistent at bottoming out near the levels mentioned above, I decided to take on the downside risk.

Trade Rank: 33

Average Daily Price Range: $3.29

First purchase: September 13, 2006 @ $66.73.

Last purchase: October 23, 2006 @ $59.35.

Recent price: May 13, 2019 @ $124.42 (up 87% from the first purchase price)

Total Purchases: 12 (before today's trade)

Trading Tide Levels:
Mid Tide (S&P hit a Low Tide of 2825 on May 10, 2019 coming off a High Tide of 2954 on May 1, 2019)Spring/Neap Tide (VIX hit a high of 23.38 on May 9, 2019 and ended at 16.04 on May 10, 2019)Subscribe to 10KT NewsletterLearn More About 10KT
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This is for informational purposes only and the information provided does not encompass all possible or…

Course And Heading 05/13/19

Last week was an interesting week. The market fell throughout the week before an abrupt rebound on Friday. We now begin this week with what appears to be another drop in turbulent waters. The difference between the tides (see Spring Tide and Neap Tide) is hard to determine as the VIX moved 7.34 between May 9, 2019 and May 10, 2019. There's no need to sail straight into a storm.

Therefore, I am charting a safe heading to start the week:
No new long positions planned.No new short positions planned but prepared if the opportunity presents.Hold existing positions (continuing prior established headings) and will possibly sell existing positions if there is a run up.Trading Tide Levels:
Mid Tide (S&P hit a Low Tide of 2825 on May 10, 2019 coming off a High Tide of 2954 on May 1, 2019)Spring/Neap Tide (VIX hit a high of 23.38 on May 9, 2019 and ended at 16.04 on May 10, 2019)Subscribe to 10KT NewsletterLearn More About 10KT
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This is for informational purposes only and the …

REFLECTION: Course And Heading 05/06/19

One new position in T Trade #103 initiated during a turbulent week. My hope is the new position will produce a profit if the market begins to rebound and if the market struggles I will likely hold the position taking advantage of the dividend.

Course And Heading 05/06/19:
The China trade war storm showed up in the near-term forecast to start the week. The weather has been so perfect since early March, some sort of bad weather would not be surprising.

Therefore, I am continuing the same heading to start the week:
No new long positions plannedNo new short positions plannedHold existing positions (continuing prior established headings) and will possibly sell existing positions if there is a run up.Trading Tide Levels:
Mid Tide (S&P hit a Low Tide of 2825 last week coming off a High Tide of 2954 on May 1, 2019)Neap Tide (VIX hit a high of 23.38 on May 9, 2019 and ended at 16.04 yesterday)Subscribe to 10KT NewsletterLearn More About 10KT
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This is for informational purposes on…

It's Finally Storming!

Over the last couple of years, the average upward Tide Move has taken about 48 days from Low Tide to High Tide. As of today, it has been 54 days since the last Low Tide on March 8, 2019. We're also seeing our first Spring Tide in about 5 months.

Therefore, I am continuing the same heading but getting prepared to make some slight adjustments:
Possible new long positions planned if the S&P can approach 2722No new short positions plannedHold existing positions (continuing prior established headings) and will possibly sell existing positions if there is a run up.Trading Tide Levels:
Receding High Tide (S&P hit a high of 2954 last week and today has dropped to a low of 2871 as of this post)Spring Tide (VIX hit 21.52 so far today)Subscribe to 10KT NewsletterLearn More About 10KT
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This is for informational purposes only and the information provided does not encompass all possible or probable outcomes and nothing posted here is an indication of future results. Nothing i…

April 2019 Return

As of the end of April, 2019:
YTD Return: 10%1 Year Return 7%3 Year Return -1% average per year5 Year Return 1% average per year10 Year Return 21% average per yearLifetime Return -30% (-2.5% average annual return)Trading Tide Levels:
High Tide (S&P hit a high of 2954 last week and the last Low Tide was 2722 on March 8, 2019)Neap Tide (VIX hit a low of 11.03 recently but jumped to 18.80 today)Subscribe to 10KT NewsletterLearn More About 10KT
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This is for informational purposes only and the information provided does not encompass all possible or probable outcomes and nothing posted here is an indication of future results. Nothing in this blog is a guarantee or promise of future investment returns and investing in stocks or bonds carries risks including losing your entire investment. I do not recommend, advocate or endorse any third-party links, resources or advertisements of any kind. Any investment decisions are recommended to be in conjunction with a Certified Financial…

REFLECTION: Course And Heading 04/29/19

AUY Trade #91 continues to disappoint. At this point I'm hoping they are prepping themselves for sale. With a sizable debt reduction upcoming and key assets remaining, if management follows through on their stated commitment to shareholder returns, then maybe I will see an opportunity to return to port for some much needed repairs.

Course And Heading 04/29/19:
Once again, the tide remains high during rip tide season and the forecast remains pleasant. There is one potential storm this week with AUY Trade #91 reporting earnings. Let's hope for some good news as we just endured a recent storm with this stock when they sold one of their key assets.

Therefore, I am continuing the same heading to start the week:
No new long positions plannedNo new short positions plannedHold existing positions (continuing prior established headings) and will possibly sell existing positions if there is a run up. I am getting more cautious as it has now been about 42 days since the last low tide.Tradi…

Course And Heading 05/06/19

The China trade war storm showed up in the near-term forecast to start the week. The weather has been so perfect since early March, some sort of bad weather would not be surprising.

Therefore, I am continuing the same heading to start the week:
No new long positions plannedNo new short positions plannedHold existing positions (continuing prior established headings) and will possibly sell existing positions if there is a run up.Trading Tide Levels:
High Tide (S&P hit a high of 2954 last week and the last Low Tide was 2722 on March 8, 2019)Neap Tide (VIX hit a low of 11.03 recently but jumped to 18.80 today)Subscribe to 10KT NewsletterLearn More About 10KT
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This is for informational purposes only and the information provided does not encompass all possible or probable outcomes and nothing posted here is an indication of future results. Nothing in this blog is a guarantee or promise of future investment returns and investing in stocks or bonds carries risks including losin…