Sunday, August 15, 2004
Okay, I've had a great week. Let's hope that it doesn't turn sour next week. I'll assume that you know about bar charts. I'll also assume that you have read about moving averages. If you haven't read them or understand them, then don't even try to understand this post. I really would appreciate if you would at least try. The pay off is worth it.
Now let me explain something to you. It's called a short sale. Basically, let's say that Bob and I have the same broker. I call my broker and say, "Sell Bob's hundred shares and I'll buy them back in a little while." Now, The broker sells Bob's stock at 20 dollars a share, and (hopefully) the price drops by two dollars. I buy the stock back at 18 and keep the two dollar difference. Bob gets screwed in the process, but I get to keep two dollars of his money. If I sold a hundred of his shares, then I have made a tidy 200 dollars minus brokerage fees.
Of course, Bob could have prevented losing that 200 dollars. If he had placed a stop order, he could have prevented his loss. A stop order is where he could have told his broker that if the share price loses fifty cents, then the broker should sell it for him. Granted this order costs more than regular commissions, but it also prevents him from losing an additional 150 dollars.
Go all that? I hope so. Behold the power of technical analysis.
Tuesday, August 3
I buy 100 shares of Hewlett Packard. Share price, $20.27. You don't need to click over to Yahoo. If you do, it might spoil the good news. The link's there if you want it. I place a stop order at $17.75.
Monday August 9th
Actually, I'm not sure of when it happened. After a slight rise in HPQ, the stock plummets downward. The low for the day is 17.77, two cents shot of my stop. Eventually it does rise back up about 20 cents, but it's still below my purchase price.
Wednesday, August 11th
Another drop in HPQ. My stop does execute this time. Not including fees, total loss adds up to 52 dollars. Truthfully, by following the program I would have made 110 dollars by this time, so losing the 52 doesn't kill me. I shrug and say, "Hey, it's still working. It all boils down to percentages. YOu win some. You lose some." (You'll note that I said "would have" a couple of sentences ago. The truth is that I have tried to guess the system and screwed it up every time. I've lost money before and after reading about technical analysis.)
I saw it coming. Remember. You buy when the 5d MA moves above the 20D MA. You sell when the 20d MA moves above the 5d MA. The 5d MA had been heading south for a while. Ironically, it crosses as my stop kicks in.
Now I reason like this. If I'm supposed to sell, what happens if I short it. The program tells me to sell, and I am. I'm just selling some one elses as well. See I'm following the program. I'm just following it to another conclusion. If the 5d MA is on top it's on it's way up, and if it's not going up, then it's going down right?
The price has dropped more while I consider this. I figure at 19.55, I can buy 140 shares. So I short 140 shares. I guess I could do more, but I want to keep the math simple.
The stock drops all the way to 19.14. I continue to watch it rise. I say "This is crazy. If I sit here watch this stock, I'll make myself nuts. I've got errands to run and I need to work on my faith in the system."
I go to the bank. I'm putting some more money in my Brokerage account. I've just been waiting on the checks from the new bank. I get certified funds from old bank and a voided check from new bank. I drive to Brentwood and leave both. Now I can just deposit funds over the internet from new bank.
While I am at the bank, some one overhears me say my broker. He wishes me better luck than he's had. He's placed 64,000 dollars in his account and has nothing but problems, federal mantenance calls, delayed confirms on his trades, et cetera. I know what he means, but don't worry about it. Basically, he's day trading. I ask him if he's ever heard of technical analysis. I tell him I have tried day trading and blow it up every time. I've tried guess technical analysis and screw it up every time. I try to make him understand what I have learned. I do better trading from week to week. Follow the program. Don't guess it. Slow and steady wins the race. I really am still nervous about it, but I still preach the good word.
After a day of running errands, I'm tired. I get online. I check HPQ. It's dropped 3 cents overall. The words that I gave to the man at the bank echo in my head. Faith in the system. Slow and Steady. Follow the program.
The next morning, I log on. I notice that the bottom has dropped out of HPQ. I check the news stories. After the bell, HPQ announces that they aren't going to make their projected profits. The next quarter isn't looking good either.
There is much rejoicing when I learn that the stock closes out $2.67 lower.
Friday August 13
I fear that HPQ may rise costing me some profit. I don't fear much though. How likely is it that a company will rise $2.67 in a day? The bear may go out the window, but the bull goes up the stairs. It drops another 45 cents by the end of Friday.
Here comes the science
My total take so far: $3.05 per share.
Subtracting the 52 cents I lost when I owned it makes my profit $2.53
$2.53 times 140 shares equals $354.20, not including fees.
Total amount that I am down in my brokerage account since opening it: $200 (roughly)
Number of trades I've done: 50 (roughly)
Total cost of fees: $350 (roughly)
If I've $200 dollars away, and I've paid out $350 then I have made up for all my losses and a good chunk of my fees.
According to the IRS, I'm in positive territory.
According to the math I am going to do, I've still got two hundred dollars to go.
Now I had $3000 (roughly) in my account. If I've made $354.20, then I have had an eleven percent return on one trade. I have not closed my position (bought the stock back) so I may still make more money of off this stock.
That's some pretty good luck.
And to think I was excited when I learned that I can get a ten percent return in a YEAR off of Tax Deeds.
Now you know what I've been so geeked out about for the past few days. I hope you are as well. Gunny tired. Gunny must work tonight. Gunny sleep now.
Now let me explain something to you. It's called a short sale. Basically, let's say that Bob and I have the same broker. I call my broker and say, "Sell Bob's hundred shares and I'll buy them back in a little while." Now, The broker sells Bob's stock at 20 dollars a share, and (hopefully) the price drops by two dollars. I buy the stock back at 18 and keep the two dollar difference. Bob gets screwed in the process, but I get to keep two dollars of his money. If I sold a hundred of his shares, then I have made a tidy 200 dollars minus brokerage fees.
Of course, Bob could have prevented losing that 200 dollars. If he had placed a stop order, he could have prevented his loss. A stop order is where he could have told his broker that if the share price loses fifty cents, then the broker should sell it for him. Granted this order costs more than regular commissions, but it also prevents him from losing an additional 150 dollars.
Go all that? I hope so. Behold the power of technical analysis.
Tuesday, August 3
I buy 100 shares of Hewlett Packard. Share price, $20.27. You don't need to click over to Yahoo. If you do, it might spoil the good news. The link's there if you want it. I place a stop order at $17.75.
Monday August 9th
Actually, I'm not sure of when it happened. After a slight rise in HPQ, the stock plummets downward. The low for the day is 17.77, two cents shot of my stop. Eventually it does rise back up about 20 cents, but it's still below my purchase price.
Wednesday, August 11th
Another drop in HPQ. My stop does execute this time. Not including fees, total loss adds up to 52 dollars. Truthfully, by following the program I would have made 110 dollars by this time, so losing the 52 doesn't kill me. I shrug and say, "Hey, it's still working. It all boils down to percentages. YOu win some. You lose some." (You'll note that I said "would have" a couple of sentences ago. The truth is that I have tried to guess the system and screwed it up every time. I've lost money before and after reading about technical analysis.)
I saw it coming. Remember. You buy when the 5d MA moves above the 20D MA. You sell when the 20d MA moves above the 5d MA. The 5d MA had been heading south for a while. Ironically, it crosses as my stop kicks in.
Now I reason like this. If I'm supposed to sell, what happens if I short it. The program tells me to sell, and I am. I'm just selling some one elses as well. See I'm following the program. I'm just following it to another conclusion. If the 5d MA is on top it's on it's way up, and if it's not going up, then it's going down right?
The price has dropped more while I consider this. I figure at 19.55, I can buy 140 shares. So I short 140 shares. I guess I could do more, but I want to keep the math simple.
The stock drops all the way to 19.14. I continue to watch it rise. I say "This is crazy. If I sit here watch this stock, I'll make myself nuts. I've got errands to run and I need to work on my faith in the system."
I go to the bank. I'm putting some more money in my Brokerage account. I've just been waiting on the checks from the new bank. I get certified funds from old bank and a voided check from new bank. I drive to Brentwood and leave both. Now I can just deposit funds over the internet from new bank.
While I am at the bank, some one overhears me say my broker. He wishes me better luck than he's had. He's placed 64,000 dollars in his account and has nothing but problems, federal mantenance calls, delayed confirms on his trades, et cetera. I know what he means, but don't worry about it. Basically, he's day trading. I ask him if he's ever heard of technical analysis. I tell him I have tried day trading and blow it up every time. I've tried guess technical analysis and screw it up every time. I try to make him understand what I have learned. I do better trading from week to week. Follow the program. Don't guess it. Slow and steady wins the race. I really am still nervous about it, but I still preach the good word.
After a day of running errands, I'm tired. I get online. I check HPQ. It's dropped 3 cents overall. The words that I gave to the man at the bank echo in my head. Faith in the system. Slow and Steady. Follow the program.
The next morning, I log on. I notice that the bottom has dropped out of HPQ. I check the news stories. After the bell, HPQ announces that they aren't going to make their projected profits. The next quarter isn't looking good either.
There is much rejoicing when I learn that the stock closes out $2.67 lower.
Friday August 13
I fear that HPQ may rise costing me some profit. I don't fear much though. How likely is it that a company will rise $2.67 in a day? The bear may go out the window, but the bull goes up the stairs. It drops another 45 cents by the end of Friday.
Here comes the science
My total take so far: $3.05 per share.
Subtracting the 52 cents I lost when I owned it makes my profit $2.53
$2.53 times 140 shares equals $354.20, not including fees.
Total amount that I am down in my brokerage account since opening it: $200 (roughly)
Number of trades I've done: 50 (roughly)
Total cost of fees: $350 (roughly)
If I've $200 dollars away, and I've paid out $350 then I have made up for all my losses and a good chunk of my fees.
According to the IRS, I'm in positive territory.
According to the math I am going to do, I've still got two hundred dollars to go.
Now I had $3000 (roughly) in my account. If I've made $354.20, then I have had an eleven percent return on one trade. I have not closed my position (bought the stock back) so I may still make more money of off this stock.
That's some pretty good luck.
And to think I was excited when I learned that I can get a ten percent return in a YEAR off of Tax Deeds.
Now you know what I've been so geeked out about for the past few days. I hope you are as well. Gunny tired. Gunny must work tonight. Gunny sleep now.
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