Trading Videos

Periodically I will make new trading videos that are stock specific.  If you'd like me to do some quick technical analysis on any equity in any tradable market, future, mutual fund, please leave me a comment here or in my YouTube channel and what the symbol and derivative is.

I will give you my opinion and in no way is my opinion construed as financial advice, but rather food for thought.  You are to make your own trading and investing decisions.

My link will be over in the Trading Resources to the left hand side of this page - Gorilla Dancing Trading Videos.

More Than A Year

I can't believe it's been more than a year since I last wrote a post to this blog.  I have been intermittently looking at the markets and have been doing some light trading and will continue to for awhile.  No daytrading for me, just swing trading, holding positions anywhere from a couple days to maybe a week?

Have made some good trades on FSLR.  I am not doing options right now, just straight equities.  When you've been away for awhile, it's best to not over do it and gradually rebuild the capital.  I've traded FLSR just before it went gangbuster on 4/9.  Got in the day before and had no clue that it would go from the mid 20s up to 40ish.  When it did that, I did immediately get out as I looked at it's history and saw that usually after a big move, it quickly pulls back.

It's now done that several times and each time I have been able to take advantage of this.  My most recent was when it almost hit $53.  I got out about $52.  I'm using more caution here as the $51-52 was my target original target.

Other stocks I am looking at are:  BAC, INTC, AMD, SPWR, GLW, MS, YAHOO, BSX, BBRY, ZNGA.  When I have time, and the inclination, I will choose the best ones and maybe do a short video of these and some technical analysis before I get into the trades.


Review of the Way I Trade

Here is a review of the way I trade:




This week I daytraded (papertraded) some parts of Mon, Tues, Fri.  Had other things going on on Wed & Thurs.

Mon = 8.50 pts  ----> 2.25 hrs trading (end of day)
Tues = 20 pts (6 trades) ----> 3.75 hrs of trading (middle of day, end of day)
Fri = 13.75 pts (6 trades) ----> intermittently 6 hrs

Follow Your Trading Plan Reaps Good Results

Today, the market was bullish.  Trading today was relatively easy.  I know some days that is not the case.  Today I was significantly more disciplined that I was yesterday.  Today the things I did right were:

  • Looked at multiple timeframes from 1 min. all the way to the last 90 days.  This gives you a better perspective.
  • I drew lines at major supports & resistances from the different timeframes, starting with the past 5 days, 10 days, etc.  The most significant ones would be the ones that were closest to what the ES is currently trading at, as these would be good pausing points or reversal areas.
  • Putting in lines of support & resistances really played a major role in when I got into and out of trades, as traders went right to those areas.  It makes trading much easier, because my indicators also support what I was seeing on the price chart . . . For example, RSI would be at overbought region as it neared a resistance, and buying volume was weakening.  This would signal for me that it was time to scale out of the trade and to set my stops closer for exit.
  • I waited until all my trading criteria were fulfilled instead of just partially fulfilled.
  • I did not rush into any trade where I could not see my criteria fulfilled.  If it passed by, oh well.  Another trade will come along.
  • Following my trading plan during the times I traded allowed me to take 6 trades with a total of 20 points in 3.75 hrs.  
  • Today I traded from 10:00 am EST to 1:00 pm EST.  Normally I would not trade during lunchtime back east, but somehow today I felt like it as the market looked like it was still moving enough to take trades. I also traded from 3:15 pm EST to 4:00 pm EST.  I saw the movements in the last 15 min., but I didn't feel comfortable getting in as I did yesterday, so I stayed out.  It probably would've given me another 2-3 points, but my gut said to stay out.
  • 15 pts (3 trades) were made in the first round of trading and 5 pts (3 trades) in the 2nd round of trading.
  • I do not feel boastful or prideful, but amazed that following one's good trading plan as one ought to results in good trades, and in today's case, all profitable ones.
  • I will have to do this many times more and do it nonchalantly, as I build up my trading account to trade again.

Awhile

I can't remember the last time I posted to this blog.  Today I got to trade the last 2.25 hrs of the market, the ES.  A friend encouraged me to do so, even though my accounts are technically not allowing me to trade - dipped too low.  I was going to say that it's not over until the fat lady sings.  Well, considering that I'm once again on the weight loss (bodyfat loss) journey and so far fairly successful, the fat lady won't be singing anytime soon hopefully.

Me not being in the market is taking longer than I would like, but all things happen for a reason.  I need to earn my way back to be able to trade the markets.

So, today, following my trading plan, which is now instead of 4 steps, it's comprised of 3 steps.  Love simplification.  Basically I look at volume, RSI, and my chart.  My prices are in candles and I have the 200 EMA on my chart.  That's it.

I don't have a chart to show you today, but I made 5 trades.  4 trades had profits, 1 trade was break even.

Of those 5 trades I took, 3 of them followed my trading plan and 2 only followed 2 of the 3 steps.  It's not like it's a lot of steps to follow, eh?  Though I netted a half point NOT following my trading plan precisely, it's still not good.

Today is just a random day and prior to today, I had no clue what was happening in the market.  My trading plan does apply to all market conditions.  I used the 1 & 5 min. charts today and went along with the trend that was occurring for that shorter time period.

Of course, another thing I did wrong was I did not check to see what the economic indicators were.  That could've been deadly.  Ugggh.  Even if I could trade today, though I took 10.5 pts from the market in 2.5 hrs with 1 contract, I'm not ready.

That Long

I can't believe it's been since February since I last wrote.  A lot of stuff has gone on in my personal life that has not been good, but at the same time, God has been helping me make lemonade out of lemons.  My finances still have a lot left to be desired, but I am making progress towards getting things organized and straightened out.  It will most likely take the remainder of this year to get through the mess I have and get on a better footing.

A part of this probably means getting a job and working for someone, as the things I've attempted to make a go of have not panned out.  Learned some valuable lessons there, but at least I went for it, though, failing again.

The past week, I've been looking at the market and the stocks that I have liked in the past and still like today because of their trading patterns and the consistency with which they trade.

My favorites for now are:
  • ALXN
  • AAPL
  • AMZN
  • BIDU
  • CMI
  • GOOG
  • HON
  • IBM
  • ISRG
  • JOYG
  • MA
  • MOS
  • NFLX
  • ORCL
  • SLB
  • SOHU
  • UTX
  • V
  • WYNN (I would not put money to this just because of the gambling aspect, but it has good patterns)
  • XLE
Maybe I'll create some videos talking about why I like these.  Don't have time right now, but maybe next week sometime.

S&P 500

I've gone in little spurts to put a blurb or so about the market.  Since I looked at BIDU and a few ETFs, I've just gotta look at the S&P, which is also another chart I love.

Isn't this a beautiful chart?  It is gorgeous.

Do I see the S&P going to the near 1600 range?  That's only about another 300 points away.  We're about 1/2 way there from the 200 EMA.  It just hit overbought in RSI and it would be poised to pullback some, so that would not be surprising.

If we look at RSI, this peak was reached in the late 2007 timeframe.  The market often likes to do what it's done in the past, so pulling back right here would totally make sense.  MACD is reaching it's high of that in 2004 and 2010 again. 

From the 666 low in 2009, it's nearly doubled that and only had one pullback of 200 points. 

Looking back at the first time the S&P 500 nearly hit 1600, it had 5 short pullbacks, then it just couldn't get up the umphf to keep going and finally conked out.  It took 8 months going sideways before the market decided it couldn't go any higher.

The 2nd time it rallied to near 1600, it had about 5 longer pullbacks also.  After this 2nd time to the near 1600 mark, it took 8 months going sideways before the market decided to drop.  Hmmmmm.  Interesting, isn't it?

So far in this 3rd time going to 1600, it's had one very short pullback at the end of 2009 and one first 1/2 of 2010.  That's 2.  Three more pullbacks before hitting 1600? 

Here at 1310 would be a great place because it's done this before in 2006 & 2001.  That would be pullback 3.

1440 would make a good 4th pullback.

1520 would make a good 5th pullback to attempt to rally to 1600.

The channels I've drawn on my chart make a lot of sense to use as support & resistance.  What do you think?
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A BIDU Options Order

Okay, I just decided to put a practice trade in, since it's been quite some time.

BIDU may have a pullback some, so I'm going for this. 

Buy Feb120P @ Market as long as it's < $118.25 or > $117.
Sell @ Market < $112 or >$119.51.

Let's see how this goes.  It's less than 2 weeks to Expiration Friday.

I notice there are also Weekly Options.  I don't know what that is, but I did not go with those.  Will have to do a little research to see what those are.  I notice the prices are a little less expensive than the regular options.
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Can We Push Higher?

So how does this work?  How does a stock decide it wants to keep going higher as opposed to decide to go lower?

I heard once a stock stops going higher when it starts going down.  Well, duh!

RSI is something that I love to us, with a period of 7.  There is no indicator that is 100% proof.  I do use RSI in conjunction with Volume, MACD, the moving averages. 

What I've noticed is that although RSI can be trending down, it does sometime take time for everything to jive with each other. 

In the middle of Sep'10, BIDU begins to rally (daily, 1 yr chart).  The stock pushes high, RSI is trending up and not in overbought area, MACD is bullish, and the stock is above all my EMAs (10/20/50/200).  That is bullish. 

However, you cannot get any higher for RSI than 100.  When you're pushing really close to this, you need to really watch out for a pullback.  Such was the case with BIDU.  There is some heavy selling, but the stock doesn't pullback much.  The stock basically remains above the 20 EMA, RSI drops, MACD weakens, and the stock really attempts to rally.

It will often attempt a number of times before it just gives up.  BIDU, however, doesn't give up for long before it rallies again.  I've found that BIDU likes to often work in rounds of 3-5, either up or down.  Each iteration up or down is another time to get back into the game.

Here's what a stock will do -- I think I can, I think I can, I think I can . . . and if there's enough steep, it'll keep going, or take a little rest before it keeps going.  Other times, it's just way to hard and it will come plummeting down.

Can we push high?

BIDU - I Love You

I guess I just broke one of the rules of trading, right?  One should never be in love with a stock, but how could you not for BIDU?  I'm Chinese and this is an exciting stock that is a mover and a shaker.  But, I'm also an American and it trades on an American Exchange.

This stock just LOVES to go up.  As one looks at the volumes in terms of trending, the past 2 yrs this stock has been losing volume.  Granted, it's still trading monthly around the 300,000 million average for the past 2 yrs.  It's about trends, though.

Volumes are decreasing and the stock pushes higher.  RSI has a slight trend towards the downside.  Though they just had an earnings report and the stock has pushed the highest it's ever been, my bets are that a pullback are in order, probably to fill the gap.

RSI, Bullish Volume, MACD are all signalling to me bearish.  RSI is in overbought territory.  A real pullback is in order, but, of course, I can always be wrong.  That's the thing with trading, you can always be wrong.

I'm still on a trading break, but since my charts were up, I figure why not look at least one stock - my favorite, BIDU. 
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ETFs - Regional Bank

A friend of mine asked me to look up 3 regional bank ETFs:  KRE, IAT, RKH. 

This isn't something I'm normally interested in and not that I would be here either.  All three are in compression and ready to breakout either up or down.  The only way I can see any of these banks breaking to the upside is some major news.  Since I haven't been keeping up with the news, I have no clue.

Of these 3 ETFs, I would choose RKH mostly.  It has the most movement and seems a little less boring.  The one I would choose the lease is IAT.  Yawn, yawn, yawn.
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Relationships

I think I've written on this topic before and care to touch it again, but in a different way.  Are you a giver or a taker?  I would love to be a consistent taker in the market.  Why am I not?  I still think it has to do with mindsets - what's deep in my subconscious and what's on the inside of me that manifests itself into this natural world.

For a long time, as a person, I was a big giver.  However, I don't want to be a giver of funds into the market, yet I have been that also.  The past 3 yrs, I've been learned to be a receiver.  That's a bit different than a taker.  Sometimes you do need to be a taker, but other times, receiving is different.

The past 2 months, I've gotten involved in my exercising back in full swing.  I figure I need to settle areas of my life before trading and this is part of the process.  It's to become steadfast in what I'm doing, rather than look for excitement in the market.

The most successful traders I know consistently take their trades whether profitable or costing.  They do the routine of taking money and don't need that additional excitement that I've found that I have needed, which has been detrimental.

The most successful traders I know are incredible people -- they have a good balance of caring for people (giving) and receiving from the market.  It's been interesting to see generous people who get more money.  The generosity continues.  Rather, selfish people who gain money, it's sort of like the Dead Sea.  It just all stops there. 

The weight loss program I'm on with Scott Colby, I've found him to be an incredible person with great integrity and a huge, generous heart.  He gives so much and helps people out a lot.  I can't help but want for him to have super great success that grows wildly.  He's real, transparent, yet, he's found a way to make money, have fun, help people out.  I have a super deep respect for the guy and hope that all his dreams come true.

I'm noticing many of the relationships that are coming into my life are from really wonderful people.  However, sometimes an icky person pops back in and I've got to take notice.  Why is that?  Is there still an element or stuff inside of me that is attracting sleeziness, people who lack moral integrity as well as people whom I don't respect or trust?  One could ignore that and say it doesn't exist within ourselves, but I do believe we attract what's really inside of us.

Gotta look deeper to see if there are areas I'm being dishonest in my life.  The reason why I'm writing about this in a trading blog is if we have unhealthy relationships, I do believe that will impact my ability to be able to trade well and to be able to keep money, grow my accounts consistently.

New Look

I think it's time for a new look for this blog.  Loved the other look, but needed a change.  What are your thoughts?  This is really a simple look.

Gorillas live amidst the trees.  What that some type of movie?

I'm thinking my future is filled with lots of green, an abundance of green.

Open Mindedness

One of the biggest I had in trading the past year or so is under capitalization.  The more things I read and hear about traders is that they are either using too much of their account to trade or under capitalized, which really is about the same thing to me.  Multiple professional traders talk about using no more than 1-2% of your account on any trade.

Thus, if you have a $100,000 account, that means no more than $1K-2K on a trade, or was that total in the whole market?  I have to go back and reread Alexander Elder's stuff, listen to some of Norman Hallett, Hubert Senters, John Carter, Mark H. and some of those guys.  Let me tell you this, I don't even have close to that account right now.  Yes, I have multiple times in the past.  HAD!

What about people who have small accounts, like under $10K?  Does that mean you can only trade $100-200? or if it's $5K, then $50-100?  Honestly, I don't really know at this point.  I do know that when you have a small account, there is the fear that you might lose it, which caused me to NOT follow my written trading plan.

Okay, this post wasn't really about that, rather to increase my capitalization.  How do I do that if I'm not trading? 

I don't expect to inherit money, win the lottery (I don't play), or expect any winfall.  Guess that means I just have to go out an earn it, eh?

Someone suggested with my background in engineering, I can do freelance work in mechanical design and charge less than the companies that only want to do high-end stuff for big price tags, where they have all sorts of setup fees and minimums, often equating to thousands of dollars.  The business entrepreneur I spoke with yesterday said I could charge $100-200/hr (BTW, I've never made that much as an engineer, even after 15 yrs) for my services and still be charging LESS than other companies that would do the same mechanical designs.  Most of the jobs would take 1-2 hrs to do, which would be $100-400 for me, which many companies do not want to touch those types of designs.  Why couldn't I do that?

Afterall, I did spend 6 yrs in engineering school, worked for 15 yrs in industry, why not put that further to use than take some low paying job that doesn't really interest me?  I could take the jobs I want and still work around my children's schedule and they would never know the difference as I would always be there for them.  Ten jobs/wk with an average of $250/job, about 10-20 hrs a week to earn about $2500, or $10K/month.  I'd need to give a cut to the guy that gets me the jobs until I earn a good enough reputation for this and get steady business on my own.  Even if I was making $7K/month instead of the $10K, that's still $7K more than I have now.

That's really WAY better than when I was an engineer working for someone else where they dictates my schedule.  Okay, I'll give my manager credit, he often let me set my own schedule to some degree.  God bless him for that.  However, I still had to show up to work 5 days/wk. 

Anyway, that money would allow me settle my divorce aftermath and get back on track with things there, resolve everything completely after negotiations.  After that (or maybe before), I can begin trading again.  However, right now my goal for this is at least $25K to save up.  Since I don't want debts hanging over me, I'll most likely get those paid off so I don't feel worried in my trading.

This may take me a year to do (still gotta live) this engineering thing & saving before the debts/taxes, living, and saving up enough for this account.  Before trading again, not only will I definitely practice, but want to hook up with a professional trader to have him guide me so that I don't blow my account again and can steadily have it grow.

I'm beginning to see the light that it may be possible to have a mechanical design type business, trading, and raise my kids myself - spending the time I want with them.  During the days, I would daytrade futures, but on the weekends or evenings, I could get back into some longer-term options trading or do some of Tim Sykes Pennystock trading, with a smaller account, for things like IRAs ore retirement accounts.

Anyway, it feels a bit scary to get back into engineering, especially since I never thought I would go back.  I didn't think I was all that great of an engineer, but to work for major corporations for 15 yrs?  I must've been at least alright.  Maybe the branching out on my own would allow me to rise to be the person I never thought I could through God working?  Apart from God, trading, engineering, being a mommy -- I could not do any of it well.  I totally need God in all of this and am depending on Him.

I will explore these options and if God wants me in these areas, He'll open the doors for me and empower me.  If He doesn't, then this may not be the way, but maybe there are other options for me in freelance engineering?

Oh, another suggestion was to get my General Contractor's license.  I haven't a clue on how to do that, but I could study for that and if I had that, it would open more doors for me.  There are options and God wants me to be resourceful, creative and have no fear!!!

Being Aware

It's been awhile since I've written.  Still on my hiatus from trading, but right now there is the need to write.  Currently listening to Norman Hallett's free teleseminar on "The 5 Keys to Disciplined Trading" - really good stuff.  He was talking about psychology and how our neuropathways are built.  He used the words "trading is gambling" and that really struck a raw nerve in me.

I feel this thing rise in me of anger.  Not going to "vent", but just share some things I'm noticing. 

One of the things I'm learning is with regards to being offended.  Have I been consistently successful for the long-term?  No.  As Norman is going through this teleseminar, I can see why.  My mom, more than most people, have reiterated to me how much trading and the stock market is gambling.  What I don't understand is that if that's so, then why do people bet their whole retirement, pension, 401Ks and place them in the stock market?  That makes no sense to me.

How about Vegas?  My mom lives in Vegas and I think periodically she does go to the casinos.  She does do some other types of gambling, and it's fun for her.  I've received a lot of formal education in trading, lots of psychological counseling, but looking back, I see where I got the education was not the right place or that I spent way too much money blowing it on the wrong education.

All the things Norman is talking about, I've had to learn through the school of hard knocks, which has cost me way more than what he charges.  Wow, I could've saved so much time and money going through him.  I'm not getting paid to promote him, rather as I listen to him, he's telling the truth about things.

So, what have I been doing these past 2 months?  Spending time with my kids.  They started school 5 weeks ago and that's a lot of work.  Been also doing a lot of reading on money, spiritual things and it's really hitting me hard.  I'm going to be a much better and different trader when I do come back.  In the meantime, my MLMs aren't working too well, so I will be looking for other ways to bring in money somehow outside of trading.  Pray for me.  It's not what I want to do, but it needs to be done for awhile.  Sucking it up.  It's all good.

What I've Learned From Tim Sykes

I've spent some of my morning just analyzing some of Tim's performance to see what I can learn. I love charts, tables, and analyzing results, especially if they look good.

Tim does have enough data points of 376 trades in the past 28 months of trading.

Here is some of his breakdown of where he puts his money in terms of stock dollars:


What am I learning from these results? Tim optimally trades in the $1.01 to $5.00 range. He has great results and the most consistent there. He typically takes profits around the 8-9% movement. It seems when he goes to more expensive stocks, he tends to be less successfully consistent.

He's confirming that the small hits on a regular basis over time helps build a good size account. He shows reasonable discipline, regularity.

I cannot say what his trading strategies or plans or as I don't have his DVDs or watched him trade. But, these are impressive real life results.

Quick & Dirty Tim Syke's Performance

I know that Tim has his stats on his site, but I wanted to see a few things more regarding his stats. Being a number's person, this was interesting.

He started trading in his account with around $12,415 in Feb'08. He made a total of 17 trades, 5 of them costing. 70% of his trades went in his favor. His profitable trades were $2881 and costing trades were $820 with a net of $2061. Not sure if in what he reported, this included commissions or not. It would've been nice to see how much money he put into each trade.

His avg costing trade was $164 and his avg profitable trade was $240.08, so if 70% of his trades are in his favor and 30% aren't, those are GREAT stats. Of the past 29 months, he made trades in 28 months. Somehow he either didn't trade in Oct'09 or forgot to put the data in his website.

After all the data is reviewed:

Total Trades in 28 months of trading = 376

Profitable Trades = 291 (77%)
Costing Trades = 85 (23%)

Avg Profitable Trade = $1186.16
Avg Costing Trade = $711.80

ROI = 2293% in 28 months of trading ----> Pretty amazing if you ask me.

His lowest month was 46% of trades in his favor, with only 4 out of the 28 months under 60% of trades in his favor. Wow! Of those 28 months, only 1 month was negative. Another month he netted $2.00. All the other months he made more than $100.

Least month = <$340.00)
Most Month = $49,327.00

PennyStock Investing

As a single mom with a lot on her plate and haven't truly made it in trading, I know that trading is a whole lot more than just the mechanics of it. As one who now does not have much money to trade AGAIN, it's not really a shameful thing. I've heard it said that when we do not learn our lessons, they keep repeating themselves. Unfortunately, it's not as simple as Groundhog day where you get another chance to do the same day over and over again until you get it right.

Someone that has intrigued me a great deal is Tim Sykes. He really hit it big as a kid turning a small account into millions and then becoming a fund manager when he became an adult, but bit the dust. Now, for the past 3 yrs or so, he's been into pennystock investing and totally tauting this.

He seems to get on the nerves of a number of people and traders. Perhaps most real traders do not take pennystocks seriously and when I look at the penny penny stocks, they scare the dickens out of me. I can't find a definite pattern other than sheer utter chaos. I rely on technical patterns and if it looks like a Reeses monkey on heroin drawing the chart, that's pretty scary.

How do I feel about Tim? I think he's cocky, arrogant, obnoxious. But, there seems to be this lovable thing about him that attracts me to perhaps his will to thrive and to "show 'em"! Or, the "I'm going to prove you wrong" attitude. I can't say that I've extensively followed Tim, but I do admire his perseverance and his ability to be creative, go out on a limb, market himself after the blowup with his hedgefund.

I think it takes courage to publically bite the dust so hard and to come back somewhat crawling on your hands and knees, humbled, and to rebuild things, not expecting miracles, but doing things differently, learning from your past successes & failures, changing. Yes, Tim does have a big mouth. Maybe that's his personality. We all have our own quirks.

Looking at things with him, he gets a lot of criticism for all sorts of things like having a subscriber list, selling DVDs, and maybe having other monies to help fund things. There's probably more that he gets bashed for, but these are the things as of late that I've read. As I look at his results, he puts his trades out there for others to see, his results for each stock. One cannot deny the results. They are actual trades with actual profits & losses. He also says that he's not that great of a trader, but he does do some things that good traders do, I suspect.

It's smart of him to also capitalize on other ways to generate income, which he does through his website, subscribers, book, DVDs and whatever else he chooses. This is perfectly alright as this is a part of capitalism. I'm not sure why others bash him for this as there are many other people who run internet businesses also and it's perfectly alright for them to do so.

Too bad I didn't do this years ago, because if I had, I probably would still be trading at this moment as some of the pressure would be off me as trading being the only source of income for the kids and I. That's big pressure. However, that's not where I was then in life and was not opened to hearing about it. Thought all I needed was trading. Guess I was wrong. Hard lesson to learn.

One of the good things about pennystocks or stocks in general are once you own them, you own them and there are no expiration dates or time value to fool around with. Tim also seems to close his trades not looking for the homerun, rather just looking for 1 base at a time. If he needs to walk, he'll walk. He takes no shame in how he gets his profits. A bunch of small profits lead to big profits. Take your costs when your trade turns against you.

So far, Tim has published 112 trades' results with an 86% of his trades profitable. That's REALLY good. Better than my 80%. His net profits are $204,076 and net costs are $21,767.

Avg Profitable Trade = $2,125.79
Avg Costing Trading = $1,360.44

He keeps his costing trades fewer and smaller than his profitable trades. Sounds like a good trader to me. This isn't like he made 3-4 trades and he's on the winning side, but this shows a pattern of consistency with 112 trades and these odds. This is just for the first 1/2 of 2010. I'm excited to see how he will fair for the remainder of 2010. It would be so cool to see him be able to make $400K+ in the next 6 months, which would bring his net for 2010 to $600K+.

Well, Tim, if you're reading this. I'm all for you, minus the swear words. Hope you make millions and keep it.

Money & Trade Management

For the example prior, never at any time is the whole account traded, even in the early stages when there is little money. Stops are always set and managed. There is no hope. There are defined trading plans & strategies that are implemented.

The Lottery

The topic of the lottery is greatly on my mind. Is playing the lottery a good thing, especially if you're a Christian?

How are the statistics of being struck by lightning derived? Are the number of storms that have lightning documented, as well as the number of people within those storms? Then, you take the number of people killed or injured when struck by lightning? However, what were each of these people doing? I'm sure there are other variables that play into being. Certain areas of the U.S. probably have a lower chance of being struck by lightning than other areas. And, probably a big one is what you're doing - whether you're making yourself more susceptible to being struck than not.

I read somewhere that the 2000 U.S. Census population was 280 million. Yes, that was 10 yrs ago and it's more than that now. It said the odds of being struck by lightning is 1/700K.

Somewhere else I read that to win the Lotto, which is 40 balls and 6 are chosen, the odds end up being 3,838,380.

The math is: 40 x 39 x 38 x 37 x 36 x 35 = 2,763,633,600. This is for the 6 balls and possibilities.

Because the order of the balls does not matter, you divide that # by the 6 possibilities: 6 x 5 x 4 x 3 x 2 x 1 = 720.

2,763,633,600 x 720 = 3,838,380 are the odds of 1 lottery ticket

I have a friend who does about $10/month. This would be 3,838,380/10 = 383,838. Thus, his probability of winning is 1/383,838 = 0.0000026.

Whether you look at it from the odds or probability, it doesn't seem very good.

For example, if you flip a coin, your probability is: 1/2 = 0.50. That's really good.

The odds of getting struck by lightning in 2000 were 5.5 times more likely than winning the lotto. Personally, I don't know anyone struck by lightning. And, you could probably increase your chances of being struck by lightning by standing on a hill as being the highest point and carrying a long metal rod during a heavy lightning storm.

How do you increase your chances of winning in the lotto? Putting more money in. If you increased your amount by 5 times to $50, the probability of winning is 0.0000130263288 or, 1 in 76,767 chances. Still, those odds are pretty far off.

My friend has been playing the lottery for at least 10 years, maybe more. Under that premise, and since I'm a trader, let's see what could've happened to the money he used to play the lottery which he's had no real return on. Yes, he may have won $100 or so cumulative. Can't remember what he said.

He puts $10/wk in a savings account for the 36 months. Let's say there is no interest. At the end when he closes his account and opens a cash only options account at BrokersXpress, he has $360. Every month for the remainder of the 7 yrs left, he continues to add $10 of what he would've put in the lottery into his BX account. The minimum opening account is $200.

During those 36 months, he takes time to learn how to trade options. Yes, this will cost money, but he has a different account where he saved up money from giving up coffee for 5 years prior. He was spending $3.50/day every day. In 5 years with no interest, this equates to $6370. Every month he puts about $106 into his training/education (that's his coffee fund). At the end of these 3 years of training, he's spent $10,192 to learn from the right people BEFORE investing a dime into any trades.

Initially, you can't buy options like GOOG or any of those, but he has to by inexpensive options of lower priced stocks. He makes only 1 trade a month with commissions at $14.95/trade. Yes, he can probably get lowered commissions elsewhere for options with a small starting account of $360. But, I don't know those brokers, so I'm using only what I know. Since his account is so small, he doesn't have negotiating power to reduce his fees right now.

Also, during his training, the limiting beliefs on money, relationships, success, etc. were resolved. He developed good habits of money & trade management, did at least 2 yrs of simulated real time, end of day trading. He's learned to manage his emotions and has good money habits of discipline, self-control, organization and does not have a get-rich quick scheme mindset.

Let's say he makes now 10% on his money each month before commissions. Initially, he's just making 1 trade a month. He doesn't increase to 2 trades/month until he's bringing in $200 profits before commissions. This doesn't happen until month 67 of when he started saving the $10/month to invest. By now, his account is up to $3,477.34. Basically from month 37 to 67, he's only making 1 trade/month. That's basically 2.5 yrs he's been able to form good trading disciplines, self-control, managing his emotions.

Because he is wise with his money, he's also been looking for a different broker that has better tools and commissions, he decides to switch to a broker that will charge him only $1.25/contract/trade. He's significantly reduced his commissions from $29.90 roundtrip for 1 contract to $2.50. I actually pay less than this, but we'll say for the sake of this example.

During these 30 months, he's spent another $3185 in training/help to better himself in trading. The total is now $13,377 in education in trading, rather than learn the hard way. He continues to make 10% on the total of his account, only adding another contract when he makes an additional $200.

In month 86, he's making nearly $2K a month and up to 10 contracts. His account is up to $21,224.87. This is now 7 yrs down the road since he began his trading education and just a little over 4 yrs since he started actually funding any trades. Mind you, the $10/month investment at month 86 = $860. He's made a little over $20K AFTER commissions.

Year 8 (month 96) = $54.6K
Year 9 (month 108) = $169.3K
Year 10 (month 120) = $524.3K (total $10/month investment = $1200 for 10 yrs, $19.1K on education/training for trading)

At the end of his 10 yrs of investing in the lottery, he has nothing to show for it but to be bankrupt and in debt. If he had been smart and taken this route, he would have conservatively near a 1/2 million. Even if he stopped at Year 9, that's still a lot of money.

Though I do not play the lottery as my friend, I've had my own bad choices with money, trading, etc. I did not have the patience and learned the hard way on MANY things in trading, wiping out my accounts multiple times. It's sort of like the Tortoise & the Hare.

There were areas I took my time to learn properly, but other factors impeded me like impatience, lacking of knowledge and understanding, wanting to go faster than where I actually was mentally/emotionally. Pride!! (Yes, the Bible says pride comes before a fall and boy, did I fall hard).

Anyway, this is long enough. I'll have another article that expounds more on some of the mindsets here.

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