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Trade Management 101

May 1st, 2013
in contributors, syndication

by All About Trends, AllAboutTrends.net

allabouttrendslogoWhen attempting to make money in the stock market it's all about managing your trades and your expectations surrounding those trades. Below are 3 example of trades we closed Monday (28 April 2013) for subscribers and our methodology of why we did what we did.

NQ (We WERE Long 500 shares of this at 8.04 on 4-18)

Well folks, when all said and done we walked away with a gain of $395 in this issue (NYSE:NQ).  In a second trade (NASDAQ:GLUU) the gain was $270.  Between the two of them it was a gain of $665. Not great but not bad either. On its own NQ was a gain of 9.8% and on GLUU it was 20%.

Follow up:

Why focus on $665 per week or even per every two weeks as a game plan to focus upon for those in need of one? Simple. $665 per week is $2,660 per month times 12 months is $31,990 per year.

  • On a 100K account it's a 32% return in a perfect world, all the while never being more than 50% invested as we rarely if ever get to that level of being invested.
  • On a 50K account it's 63.8% return on an annual basis raw.
  • On a 25K account it's 127% (fat chance as 127% is an unrealistic goal, but you have to have a goal and a focus!) $665 every two weeks is $1,330 per month and on a 100k account it's still an annual 15.9% return all the while never getting more than 50% invested.
  • On a 50K acct. it's 32% return on an annual basis, on a 25k account it's 63.8%. We say perfect world because the world isn't perfect in this sense and nobody on the planet ever hit 18 holes in one nor has anyone ever had a 100% can't lose hit ratio in the markets, but again one has to have a goal and a point of focus and the above is a good one for you hit and runners.

All-About-Trends-2013-April-30-Fig-1

GLUU (We WERE Long 500 shares of this at 2.61 on 4-2)

Between NQ and GLUU we are looking at a gain between the two of them of around $665.00. This puts us in a "We're all doomed to make decisions" stance here. Why? Because if we sell and they go higher? It's a homer Simpson DOH! moment. If we sell and they roll over? We'll that's fine. We don't know the future nor does anyone else. So it's also a "Let's Make A Deal" Game show moment of do we go for what's in the hand showing or go for whats behind door number two and risk the gains in the event we get a flop of a prize behind door number two.

We happen to like both companies and that MAY be the problem - becoming attached to the company and not the stock. As Bill O'Neil says:

A company is only as good as its stock.

Think about that statement. Now apply that to Apple (NASDAQ:AAPL). Sure, great company, great cash flow and all the other great fundamentals under the surface but what about the stock overall? After every low the stock gets a bounce but that bounce fizzles and down to lower lows it goes. We took a shot at it on a retest of lows in the 426 level and that retest of lows failed plain and simple.   See below. Lastly with regards to NQ and GLUU?  We're apt to take the money and run here as $665 a week or two in gains is a healthy year when you add it up over time as outlined above.

All-About-Trends-2013-April-30-Fig-2

AAPL (We WERE Long 20 shares of this at 426.87 on 4-2)

Rocky Says AWESOME! Awesome? How can Rocky Balboa say awesome when we took a loss? Simple because at All AboutTrends we practice what Rocky preaches and that is:

"Sometimes it ain't about how hard you hit, it's about how hard you can get hit and keep moving forward. How much you can take and keep moving forward because that's how winning is done!"

That said we took some punches with AAPL for awhile when it fell apart.  At the 385 zone we were down 42 points or $840.  We never sell a damaged issue after it's fallen, we always wait for a bounce.  Goldman Sachs (NYSE:GS) and Citigroup (NYSE:C) were the same way for us too by the way.  We faced our fears during that time and managed our fear of loss while in the loss zone,  bending like a willow tree and waiting for the bounce no matter how uncomfortable that felt.  And sure enough this issue (Apple) bounced and when all said and done we lost $35.40 dollars on the trade.

All-About-Trends-2013-April-30-Fig-3

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