✒️Black Ink is what you use when you are recording your PROFITS. You always want to be in a position to use black ink! The following are important guidelines I always follow to ensure I use black ink as often as possible. These are “Trading Tips,” not “Investing Tips,” keep that in mind!
1) ????Safety First.
-Trailing Stop Losses are your friends. They allow you to protect the downside while leaving room on the upside. On your initial purchase of a stock decide right then and there how much you’re willing to lose and set the TSL for that percentage. My number is always 10% or less.
2) ????Lock in your Profits.
-When your trade turns profitable change your TSL to protect the gains. I typically reset my TSL at around 6% once I have captured 10% gains. When I have captured 20% gains I typically tighten my TSL to 5% or less.
-1% gains per day is 365% per year. That is unattainable for most people, but if you asked most people if they could make 1% today they would say yes. You don’t have to chase a home run, if the trajectory of your trade changes and you’re up 5%, take it!
3) ???? Trade Smart, Strategize on Entries and Exits.
-When buying a significant volume of a stock, consider using multiple entries to ensure you capture a good average entry
-I rarely sell at market. Instead I use a TSL of 1%. You might get lucky and the stock could rise again before dropping. Worst case scenario, you sell for 1% less then you would have at market value. Some people choose to make this 3%, but I keep it tight when it’s time to sell.
-Know “why” you are making a trade. Perhaps keep a journal. It could be as simple as “CALI, Swing Pattern Signal.” If you know “why” you’re doing a good job with your DD!
4) ???? Don’t Gamble Everything on the Same Game!
-DO NOT put more then 25% of your portfolio into 1 stock unless you’re ready to suffer some consequences. At the same time, it’s important to make sure the fees you pay to buy and sell don’t hurt your bottom line. You want to make sure that your fees are under 5% of the total trade, preferably under 2%. At $5 per trade, that means you would want to trade at least $200, preferably $500, and ideally you’re getting some free trade promo or purchasing stock in quantities of $1000 or more per order.
5) ⚖️ Balanced Trading
-Do not spread yourself too thin. There is a happy medium as far as how many holdings you want to have. The most I’ve ever held at one time is 15, yet when Swing trading I prefer to hold 6 or less.
???????? Especially Important to anyone in an Alert Group or Chatroom (including The Black Ink Economist’s Alert Group)
-Do your own DD before you make a purchase, YOU are accountable for your trades. A lot of these groups issue “technical alerts,” without really looking at news too much. A technical pattern can get thwarted by news or an equity offering, among other things. Spend 5 minutes checking Yahoo Finance, or Seeking Alpha, etc. and just get a general picture. Look for red flags.
You follow these rules and you’ll be in a great position to capitalize from your good moves, and limit the consequences from your mistakes! We all make mistakes, it’s how we deal with them that separates the ????Money Makers from the ????Bag Holders.
Nothing I ever say is investment advice. I’m just putting my opinions out there. In all fairness, I do have a position in CALI right now, although that’s not what this article is about.
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