Trading the stock market
April 10th, 2009 by KenricAnother potential income stream that I’ve added into my arsenal lately is actively trading stocks. In the past I haven’t traded stocks with any sort of system. My friend introduced me to a system that he developed last year which had done very well for him. I thought I’d give it a try a few weeks ago.
The system is fairly simple. It uses Metastock end of day quotes to filter the S&P 500 stocks each day. Each day it spits out a list of stocks to buy and stocks to sell short. The list is fairly short, maybe about 20 stocks each day.
Say you have a $20,000 trading portfolio. Each position would only be around $3,000. Stop losses would be set between $100-$500. These are based on position size and the stock’s volatility. Exit points are 15% profits.
It’s a very simple strategy and I’ve made 5 trades so far with it. This strategy does not involve watching the markets all day. You run the system after hours and put your orders in and they fire the next trading day.
Once you have bought a stock, you have 3 standing alerts: A stop loss, a trailing stop after 15% gain and sell order if you hit the 15% gain within 15 minutes of the closing bell. I placed all my trailing stops last night and evidently put them in wrong because 3 of my positions sold off today after a small gain.
I bought AMZN, AKAM, WFMI and BIG. I sold short HUM.
Results:
HUM was sold short at $24.80 and rose to $28.00 and was stopped out. Loss of $195
AMZN was bought at $74.80 and sold at $77.80. I screwed up my 15% trailing stop order on this and it fired right away. Gain of $100. I should still be holding this stock, oh well. There’s always trial and error using new software.
AKAM was bought at 19.47 and sold at $19.81. Again, I screwed the order up. Gain of $33.
WFMI was bought at $17.96 and sold at $18.30. Again, I f**ked up the order. Gain of $6.
BIG was bought at $23.09 and I still have it. It closed at $24.12. Not bad for 1 day. I have a sell price at $26.45 and I haven’t screwed up my alerts on this one!
Overall in the first 2 weeks, Gain of $99 using $10,000 (including commissions) or 1%.
Posted in INVEST | 4 Comments »
Stumble it!
You can officially take “invest” out of your title now that you’re just speculating.
By kkz on Apr 10, 2009
See although i see the potential in the stock market, i feel like I would have to much emotions to play the game correct. Thus resulting in more un-needed stress. I hope you get it though, sounds like you have a good hands off system.
By Chris Waldron on Apr 10, 2009
You might consider using PUTs instead of short sales, which would truly limit your downside risk.
By Qbrain on Apr 10, 2009
I would like to use options instead of stop losses but some trades do not have enough shares to use an option.
By Kenric on Apr 10, 2009