Friday, February 10, 2012

Real Trades

You might notice a couple of changes today.  I have added a disclaimer page so that I can share my actual trades with you.  The links are on the right.

I have always wanted to do so, but didn't know if I should.  When it comes right down to it, though, I don't know a better way of sharing the thought process that I use in deciding what to buy and when to buy.  You are going to notice that, currently, my time horizon is very short.  Also, my current preference is Exchange Traded Funds (ETF's) over stocks (or bonds).  That hasn't always been the case, but I feel it necessary to adjust to market conditions.  I let the market tell me what to do, and market volatility is the deciding factor for me, right now.

For ETF's, I divide my portfolio into five equal parts.  Sometimes, I will only take half of a position (one tenth of my portfolio), but usually I stick to using one of the five parts.  For the sake of simplicity, I will count the results of each trade as if it were one fifth.  A gain, or loss, of ten percent in one trade, for example, would translate into a two percent change in my overall portfolio (ten percent of twenty percent, or, 0.1 X 0.2 = 0.02).

Position Size
I know some people advocate changing the size of positions in an attempt to manage the amount of risk.  My experience has been that is a recipe for disaster.  For whatever reason, I end up winning the small returns, and losing the big ones.  If I am going to invest, I am going to wait for an opportunity which is worth taking the risk.  When in doubt, I wait for a situation where the doubt is gone.

So, follow along.  Despite my slow start, I remain optimistic, overall.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.