What do I do when the stock market is rollercoaster ride?

Today is one of those days that make you want to pull your hair out! The stock market has been down for 3 days due to Coronovirus scares and today it was looking like there might be a chance for stocks to rise. Well some have but my day trading stocks haven't...... So what should I do? I have thought about this a lot. I even have trading rules for this very problem. And the answer is NOTHING! Don't take a trade, wait for the market to reestablish itself. Then enter when things are more stable.

I know this is very hard for us to do as stock traders. After all we love trading stocks or we wouldn't have this job right, I get it. But what I have learned from trial and error is that it's better to preserve capital than try and trade in rough waters. There are sharks out there people and they will eat you alive if you aren't careful.

So if you haven't made yourself a set of trading rules yet, this is a perfect time. Take the downtime from trading and use it to your advantage. My trading rules are quite simple and go like this:

1. Do the work.... research, read and evaluate. 

2. Breathe on the open. Wait 3 minuets after the opening bell before taking a trade.

3. Stop trading for the day after 2 red trades.

4. Stop trading for the day after a $250 loss.

5. Don't take a trade on FOMO - Fear of Missing Out (You have probable already missed the move anyway if you are feeling FOMO.) Don't worry, there will always be another stock to trade.

6. Remember to have a mantra- I am enough, I have enough is mine right now.

Hope this helps you all in the turbulent moments.

Happy trading,
Michelle

Which brokerage should I use?

We have defined day trading as the practice of buying and selling stocks in a short timeframe, typically in the same day. The goal is to earn profit on each trade and then compound those gains over time. This makes finding the best brokerage firm for your trading account an important consideration when you want to trade for a living or even trade for part time income. When you choose a broker, you are forming a partnership with them, trusting that they will execute your trades in a fast and consistent way so as to maximize your profits.

With the rise of online stock brokers and no cost trades, the competition over who to choose for your broker is fierce. So how do you make the decision? First and foremost, we want to look at cost. Since Oct. of 2019 many brokerage firms have gone to $0 trade fees. This is good news for us but makes it harder to sift thru the many companies out there providing free trades. I read a great article from Nerd Wallet comparing the top brokerage sites. 7 Best Online Trading Platforms for Day Trading and a good resource at Investopedia Best Brokers for Day Trading: November 2019

My recommendation is that you choose a brokerage firm that provides a training simulator. This gives you a way to begin your trading journey using paper money rather than your own hard earned cash. I am a member of Warrior Trading and I have been trading on the simulator for several weeks now. It has helped me tremendously even though I have an extensive background in finance and investing. 

You will also want to consider margin accounts, (which we will get into in another post), price quotes and data feeds. As a day trader we need the most accurate, up to the minute information so we can make smart entry & exit decisions and make money! 

Thank you for stopping by.

Peace . Love. Trade another day,

Michelle

Yoga, Meditation and Trading

My weekend was spent in a Yoga Teacher Training workshop at Yoga Den. I spent 2 full days doing yoga and learning how to safely assist others in their yoga practice.  After a few months of illness, I am returning to my own yoga practice and really enjoying being back on the mat.

Since my two loves are yoga and stock trading, I wanted to take a moment and let you know how these two can live in the same space. I use yoga as a way to get my body ready to sit in the chair at my desk to trade by doing a morning yoga practice and I destress from my day with meditation.

I did a little research on the benefits of yoga today. There is some great information on the Yoga Journal website.

Top 5 benefits as I feel relate to trading:

Relaxes your system.

Yoga encourages you to relax, slow your breath, and focus on the present, shifting the balance from the sympathetic nervous system (or the fight-or-flight response) to the parasympathetic nervous system. The latter is calming and restorative; it lowers breathing and heart rates, decreases blood pressure, and increases blood flow to the intestines and reproductive organs—comprising what Herbert Benson, M.D., calls the relaxation response.

Increases your blood flow.

Yoga gets your blood flowing. More specifically, the relaxation exercises you learn in yoga can help your circulation, especially in your hands and feet. Yoga also gets more oxygen to your cells, which function better as a result. Twisting poses are thought to wring out venous blood from internal organs and allow oxygenated blood to flow in once the twist is released. Inverted poses, such as Headstand, Handstand, and Shoulderstand, encourage venous blood from the legs and pelvis to flow back to the heart, where it can be pumped to the lungs to be freshly oxygenated. 

Helps you focus.

An important component of yoga is focusing on the present. Studies have found that regular yoga practice improves coordination, reaction time, memory, and even IQ scores. People who practice Transcendental Meditation demonstrate the ability to solve problems and acquire and recall information better—probably because they're less distracted by their thoughts, which can play over and over like an endless tape loop.

Helps you sleep deeper.

Stimulation is good, but too much of it taxes the nervous system. Yoga can provide relief from the hustle and bustle of modern life. Restorative asana, yoga nidra (a form of guided relaxation), Savasana, pranayama, and meditation encourage pratyahara, a turning inward of the senses, which provides downtime for the nervous system. Another by-product of a regular yoga practice, studies suggest, is better sleep—which means you'll be less tired and stressed and less likely to have accidents.

Gives you peace of mind.

Yoga quells the fluctuations of the mind, according to Patanjali'sYoga Sutra. In other words, it slows down the mental loops of frustration, regret, anger, fear, and desire that can cause stress. And since stress is implicated in so many health problems—from migraines and insomnia to lupus, MS, eczema, high blood pressure, and heart attacks—if you learn to quiet your mind, you'll be likely to live longer and healthier.

My wish is to encourage you to start your own yoga practice so you can begin to live your best life on and off the mat.  

Namaste and Trade Another Day!

Michelle 

Stock Market alternatives, it's not all about day trading....

So this week the stock market is rough. I decided that I would take a different approach and sell some covered calls to generate income. Some of you may not be familiar with covered calls and this seemed like the perfect opportunity to discuss.  

What Is a Covered Call? 

A covered call refers to transaction in the financial market in which the investor selling call options owns the equivalent amount of the underlying security. To execute this an investor holding a long position in an asset then writes (sells) call options on that same asset to generate an income stream. The investor's long position in the asset is the "cover" because it means the seller can deliver the shares if the buyer of the call option chooses to exercise. If the investor simultaneously buys stock and writes call options against that stock position, it is known as a "buy-write" transaction. To learn more you can go to investopedia and learn more. Covered Calls Explained

Now let me try to put it in simpler terms, I went to my broker website and researched option contracts on companies that were $100 a share or less with high volume of option contracts. Then I looked for the option that paid the best premium for the price I thought would suit my needs. I bought 100 shares of that stock and then wrote an option on it to agree to sell my 100 shares for x price at a certain date. The buyer of the contract paid me a premium which was deposited into my brokerage account immediately! For the day I made over $200 on option premiums. I can also make more money off these transactions when they mature. The difference between what I paid and what the contract price is. 

I learned a lot about options and covered calls from The Wealthy Investor, Tyrone Jackson https://thewealthyinvestor.net Check it out if you want to learn more.

Namaste and Trade Another Day,

Michelle

Swing Trade and Day Trade, what's the difference?

This week has been a challenge to my health. I was diagnosed with TMJ/TMD in my jaw which is giving me extreme pain. I can barely open my mouth to eat. Hoping to lose some weight! Despite that, I had a wonderful 51st birthday yesterday and celebrated with my sweet family. I feel like at 51 I have been given a gift of a supportive husband who is behind my trading 100%. Best gift ever!

My trading update is that I am up almost $150 for the week in the simulator. I took a trade in my investment account which gave me a positive gain. Slowly I am working out a strategy in the simulator and then testing it in very small position sizes in my investment account.  My philosophy is slow and steady wins the race.

In thinking about this blog post topic today I decided it would be helpful to explain the difference between a day trade and a swing trade because I will be talking about both as we journey along. In plain English, Day Trading is when you buy a stock and sell it in the same day. Swing trading is when you buy a stock and sell it the next day or over the next couple of weeks. For more formal definitions see below....

What is Day Trading?
Securities & Exchange Commission Day Trade Definition

FINRA rules define a “day trade” as the purchasing and selling or the selling and purchasing of the same security on the same day in a margin account.  This definition encompasses any security, including options. Selling short and purchasing to cover a position in the same security on the same day is also considered a day trade.

Exceptions to this definition include:

a long security position held overnight and sold the next day prior to any new purchase of the same security; or
a short security position held overnight and purchased the next day prior to any new sale of the same security.

What Is Swing Trading?

Swing Trading

Swing trading is a style of trading that attempts to capture gains in a stock (or any financial instrument) over a period of a few days to several weeks. Swing traders primarily use technical analysis to look for trading opportunities. These traders may utilize fundamental analysis in addition to analyzing price trends and patterns.

Most of us are long term investors looking for a stock to increase in value over the long term, one year or more. That has been my strategy for many, many years and it has worked well while I was employed full time. I am sure that is what most of you do but I want to broaden your investment horizon as I take this leap of faith.  

Namaste and Trade Another Day,

Michelle

What am I reading now?

Hello! My topic today is books. I wanted to let you in on two books on my desk right now that I am reading . Well actually one is a digital book on my computer, but my computer is on my desk so that counts right? I am in the middle of both and when I finish I will give a review of them here on the blog.

How to Day Trade: A Detailed Guide to Day Trading Strategies, Risk Management, and Trader Psychology by Ross Cameron founder and amazing day trader at https://www.warriortrading.com.

Trade Mindfully: Achieve Your Optimum Trading Performance with Mindfulness and Cutting-Edge Psychology

If you know me, you know I love to read. Around my home you will find stacks and stacks of books arranged by subject. Like these art books I have displayed on a wood plant stand. It has wheels for easy portability and looks great in my entry way.

Off to start the trading day!

Namaste and trade another day, 

Michelle 

What's Paper Trading?

Some of you have asked "What is paper trading"?

Paper trading (sometimes also called "virtual stock trading") is a simulated trading process in which would-be investors can 'practice' investing without committing real money. This is done by the manipulation of imaginary money and investment positions that behave in a manner similar to the real markets.

I am using a simulator right now so that I can learn how to day trade with out risking my own 
capital. I joined Warrior Trading and that provided me with access to their simulator which I can use to trade in real time. You can see these two pictures of my trading screens. This was on my first day of learning what all the fancy charts and buttons meant. :)



During the course of my learning journey I have set goals for myself to meet. My current daily goal in the simulator is to make just $50 a day. This would provide me with $1000 profit each month. Once I have mastered $50 a day, I will up my goal to $100 a day providing me with $2000 a month and so on.  I think within 2 to 3 months I will be able to switch to investing real money.  Since I want this to be my full time career, I am willing to take my time and learn how to be a professional trader.  

Thank you for coming along today. 

Namaste and Trade Another Day,
Michelle