The goal of this blog is to provide a
chart-reader's perspective on current market trends, and map the progress of
an actual brokerage account, started with $3,500 and a 10-year goal
of $100,000. That's an average of 40 percent a year (I've already
done the math so don't bother telling me how crazy I am). It won't be
easy, but it's certainly achievable.
I've been studying and trading
for almost a year now and I've made some mistakes (some really
amateur mistakes at the beginning), but I've learned from them. And I still
have more to make, maybe even some big ones. No one can win on every trade, but I've got a plan and I'm determined to continue until I succeed.
Why I decided to do this
There are a lot of analysts out there.
Whole companies of them. They sit at their desks and make
predictions, talk about "fair value" estimates, and create
12-month price points. That's their job – to have an opinion and
some reasons for it. Their reasons are predominately based on
observations about a company's fundamentals.
While good fundamentals are typically
the result of profitable business operations, you don't have to trade
for very long to see a profitable and growing company's stock price
take big fall, or likewise, see a struggling company's stock price
surge on some bit of optimism.
When it comes right down to it,
anything is only worth what someone is willing to pay for it. After
all, around 60% of what a stock does can be attributed to market
forces. Don't get me wrong, most analysts understand how the markets
work and their reports can be a big time-saver when you're looking
for earnings summaries or sector rankings. However, the predictions
analysts make are only important to the extent that those with buying
power listen to and believe them.
I didn't hear anyone out there
predicting that Melanox Tech. Ltd. (MLNX) was going to jump almost 50
percent when it opened on July 19, earlier this year. Everyone who cared knew the quarterly earnings were due and expected them to be up around
120 percent, but companies have earnings surprises all the time and
some don't seem to respond at all. On July 18, I was looking to long
some stock and had narrowed it down to Chico's FAS (CHS) and MLNX.
I ended up going for CHS due to a
classic cup and handle pattern followed by a breakout in high volume. I
ended up taking just over 20 percent in profits on that trade after
holding it for about a month, but that didn't seem as sweet knowing I
could have doubled up in a matter of days.
Even if someone had said MLNX was due
for a run, it's hard to feel confident about predictions of people
who may or may not have any skin in the game. And why didn't I anticipate it? I thought – wow, it
would be really helpful if someone just said: “Here's exactly how I'm
putting my buying power to use, and here's why.” Sure, there's plenty of
information out there about how to create options spreads, using
stop-loss orders, timing reversals, etc., but I've looked around the
internet and couldn't find anyone who publishes their process.
Here's what it boils down to
Finding the way to success in the stock
market would easier with a map. Before aircraft and satellites, the
best way to make a map was to choose a course an chart it. Explorers
who followed could venture forth with some idea of what to expect,
knowing someone went before them and returned whole and often richer.
That's exactly what I intend to do.
I won't be giving advice. I wont be
making long term predictions, and this blog should not be confused
with professional counsel. Everyone should make responsible and
well-researched decisions for themselves regarding their own
investments.
What I will do is publish all
the relevant information about my trades, as well as what I'm looking
at and why, the hedges I implement and the actual math behind them,
current trends and, of course, charts! My hope is that by showing how
I've succeed (and where I've messed up), someone out there can learn
by my example.
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