Double A Penny - Step 20 - What A Ride

How To Double Your Way To A Million In 28 StepsDTAMP - Double To A Million Plan Blog
Whew! That was a rough trade. But it all came out in the wash.

DTAMP Equities Plan Report:

04/14/09 - Buy - 182 shares of NLY @ $various p/s - Total $2596.21
04/15/09 - Sold - 182 shares of NLY@ $14.35 p/s - Total $2602.68Total ($23.84) - ($17.97) Fees = ($5.87)Net Gain of (+0.22605)% in the Amount of ($5.87)

The last hour and half went up like a rocket and reached where I had a feeling it would, $14.35

Actually it went past it and nearly reached $14.50, but I was happy to get out where I did.

I didn't make much, only $5.87 but a profit is always better than a loss.

It has been a rough week while in this trade. I was in 4 other NLY trades in other accounts at the same time. Other personal issues were causing me problems this week and then Google stopped my Blog because some kind of fuzzy robot decided that my site was a spam site.

The last thing you need is external pressure when you are in a trade.

To top it all off I didn't listen to my I.V. (inner voice). My I.V. said that on the 14th NLY would drop to around the $13.60's and guess what I didn't listen and bamm I was knocked on my buttocks. I bought 182 shares of NLY at around $14.2190 and it kept dropping after an hour or so until reaching a low of $13.65.

Just for the record I did learn my lesson and bought more at $13.73 but not for DTAMP.

So I was stuck, but I felt that it would go up the next day and would hold on. My wife asked me what my I.V. was telling me this morning before the market opened and I told her that it would go up. She asked me how high and I told her that I felt it would hit $14.35 and that is where I would get out. (It turned out it went even higher.)

But despite that all it still is wicked hard to sit there hour after hour as it does crazy things, many times nothing like you wish it would. But in the end the I.V. is always right. It is just me that is wrong.

I wanted to try to address comments and questions to the previous blog post:

if i understand the math correctly you put the majority of the stake into NLY. from other posts it appears you are day trading.my question is, is this "risk adverse" investing?

Yes, I am making a trade with the entire amount of the stake, at least what I can do while paying commission and making sure I do not use margin. In most cases it turns out to be day trading or at least several days, as long as I do not get trapped in the trade.

For most people this would be risk adverse investing. But for me this has been the safest thing I have found to do. I like to stay out of the market with the majority of my money and only go in for a short period of time. I would call it "strategic trading" as opposed to investing. When I think of investing I think more long term. I do not do well with long term.

A short trade is usually more succesful for me. Sometimes I will try to get in longer but my personality usually forces me out before I get to benefit. I almost bought Citi at a $1.01 a share. Within a week it was over $3.00 a share. I made the choice not to because I thought the trade would be longer term. My I.V. was saying otherwise. Oh, when will I listen.

I have found that trading NLY or MFA has been one of the safest things I have done in all the decades I have attempted to be successful in the stock, commodities, forex or any markets. I found my niche and I just repeat it over and over.

Since 8/24/2008 I have made 56 trades in NLY and MFA and had one loss. A small one that had I held it would have made a profit anyways but I wanted to stop waisting time with it and I came back and made another trade and made it back 2x.

For me trading NLY has been one of the most stable and consistent things I have ever done in the markets.

also, a quick glance at NLY, it appears they might not keep their high yield div for very long and if you are in NLY and the div gets cut, you might suffer a further loss. i'm sure your due diligence is far better than mine, but i thought i'd throw that out there. of course there could be other factors that could move a stock.

At the present time NLY is paying about 16% for its dividend, which is nice. MFA is about 20%. At least the last time I looked. This gives me another fallback on my trading. It gives me the confidence that even if I really screw up and make an atrocious trade I can wait and eventually make money on the dividends.

How long those high dividends will last I am not certain. But even if the dividend drops to 5 % it still would be fine with me.

As far as loss suffered due to dividend cut from a drop in the price of the stock, this is why I don't want to really stay in long if I can. I like to make a strategic attack, get in, get out, take profit and then run away. Especially on Fridays so I have my weekends without any stress from being in a trade.

The thing I like about NLY or MFA or a few other REITs is that they are fairly stable and don't rise and fall much but still have enough volatility for me to get in and out. Even in a day to make a good profit. Though I must say that trading a small amount like $2600.00 makes the trading very difficult, especially when you have an $18.00 commission. You have to do it right to win.

lastly, three things:

1 - i was going to ask your opinion on using a small portion of the stake and speculating it on riskier stocks. sitting in them ( longer term ) until a high ROI or nothing. rinse and repeat. assuming a higher failure rate, the "winners" would have to cover all the failures. in this economy bank and car stocks might even fit the bill, but they weren't my first thought.

I tried that method with penny stocks and even TMA and I got nailed. However, if you are fortunate enough to be able to find that high producer before you run out of money then it might work. But it would be high risk, almost gambling. When I played the CNBC Stock game last year I did what you suggest with GM and made alot of money. Nothing in comparison with the winners of the game though.

I also did it with TMA and won, then lost. Then stopped. It can be very stressful to lose in a trade. It does damage to your emotions, your nerve. Then you trade from a defeated position. I have found that the more I win the more I win. Success leads to success because confidence is like a seed. Once you get it growing, the more you nuture it, the more it yields. Hacking its branches back everyday, will only hurt the thing.

Making 56 trades with only one loss makes for building confidence. Mostly confidence in your I.V. (inner voice). I used to make 56 trades and I would be lucky to make money on two trades. Failure lead to failure. I lost alot.

Becareful to not damage and wound yourself with risking getting losses. No matter what people say every loss will wound and enough of them and you will die (stop trading). I am heavily wounded and should have stopped along time ago. I persevered, probably because I didn't know better. I knew that one day I would find my place, my niche, that thing that was mine, that worked for me, my Ace in Hole. It took decades.

2 - in the case of limiting risk, have you ever tried using options to limit any downside in a stock investment?

In the past I have used options. Using them to limit downside sounds like a good idea, but like anything, you will pay for that insurance and security. One of the biggest losses in my life came from options back in 2006. Granted it wasn't the same scenario as you are mentioning. If using the option approach will help lead you to consistent winning trade then it will be worth paying for them. I have heard that selling the options is very profitable but I haven't used options much.

3 - in one month's time will your household have less debt? could the household then become a customer of your financial advice thus increasing the stake's income?

Fortunately I vowed many years ago to do everything I could to get out of debt. It was the smartest things I managed to do, especially with the economic disaster that has come. I have been following the rules of Doubling the best I can and I have sacrificed alot of money that could have been added to my stake, in the area of thousands and thousands of dollars. I would consider increasing my stake based on my own personal estate management and household off limits to my DTAMP stake.

I don't want to pollute it. I have come close to dirtying it a bit when I had the stake in the same account as my personal funds. But I felt uncomfortable with that and seperated the stake out completely.

thanks. good luck.

Your welcome and thank you. Good luck and take care.

Present Stake: $2694.08

Motto: It is only "one" found penny.
Slogan: As Simple As Finding A Penny.

Regards,

Xinfinitum



This Double A Penny Blog is based upon the Doubling Method "How to Double Your Way to a £Million in 28 Steps". Using the Doubling Rule it is an attempt to "Double Your Way to a Million" by going from one penny to a million dollars, starting from nothing. At the beginning you start by finding a penny and then double a penny until reaching $1,000,000.

How to Double Your Way to a Million in 28 Steps
D.T.A.M.P. - Double To A Million Plan
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