Well, its been a while. I have been cowering in the corner, afraid to admit my failures, pick myself up and move on. The market hit hard at the end of last year driving my meager portfolio to the ground. I held on to some investments that I normally wouldn’t with the excuse I said I wouldn’t use: “It’s down so much its not worth selling.” I added more shares to failing investments (but so far its worked… how can it not if the market is so depressed?). Basically I’ve done what I knew not to do.
But, I’ve been using my time wisely. I have studied diligently over the last few months and have decided to take a new approach to the markets. Basically, I’ve finally showed up at the “Buy-and-Hold is Dead” party. Its undeniable. Look at the market returns over the last 10 years. You could’ve done better with a CD. That’s not to say it doesn’t work at all, but it is not the optimal strategy, in my opinion. Why hold a mediocre investment while others excel? Why watch your portfolio make significant gains only to retrace to lower and lower levels?
I’ve been studying diligently. Learning what I can about position, swing and day trading (day trading simply because anytime trading comes up, day trading tags along for the discussion). I believe I have an idea about where I am going over the next few months and years. Very quickly because I have work to do.
Day Trading. I know day trading is out… I think I said that two years ago. I do not have the time, resources, stomach or experience to day trade. Look, I have to feed this market addiction… that means I have to work for a living.
Swing Trading. This seems to be where its at! Swing trading has the potential to provided the lowest risk-to-reward ratio, when done properly. 3-5 day hold periods can help reduce the risk while not destroying the potential profits. It is still time consuming, but does not require me to sit at work and monitor the markets (that reduces the risk of being fired, as well… another bonus). This is my trading sweet spot.
Position Trading. Position trading is another viable option. A week to month hold strategy. Your risk is reduced, but so are your rewards. For example, you may be holding a position and miss other opportunities. You remain exposed to the volatility of the market longer. But you also allow more time for trades to work. This is on my racquet face.
I’m not binding myself down to Swing or Position trading. Instead I am going to take the time, know where the broader market is, now, identify trading opportunities and let the trade tell me how long to be in. When possible, I will be a trend trader. Capturing the heart of a move. But at times I will try to exploit trading ranges in a range-bound market. I will try to listen to the market and decide what to do.
Back on track. I have been studying trading for the last several months. Shifting my focus from fundamentals to technicals. Trying to understand indicators, oscillators, band trading, and the sort. I’ve been learning how to build a plan, trade the plan and implement money management techniques. Over the next few days, I will build my trading plan, construct a watchlist, clear my mind and start my walk down this new path.
If you are not a spambot, and actually come across this site, I will be sharing my experiences with you. Expect some changes to the site (broken promises, I know) as I hope to make it a valuable resource, at least for myself.
Here’s to the future.
Related posts:
- Which way did he go? Well, I guess I need to figure out exactly how...
- Formulating the Playbook I’ve spent several months, now, researching the investment landscape. I...
- Ominous Beginnings I did it. I placed my money where my mouth...
I am an amateur trader and investor with over 15 years experience in the stock market. I was bred to be a fundamentalist and followed fundamental analysis until 2009. Following the 2007-2008 bear market, I began to shift from a buy-and-hold strategy to trend-following techniques.