|
Build Your Account Size Fast With Short-Term Stock Trading! |
 |
How To Start With $1,000 And Build It To Over $15,000 In One Year. By Jeffrey Brewer |
Add Money To Your Account Each Month. You start off with $1000 in your trading account. The first step to building your account is simply to add more money to it each month. It is assumed that you are a working individual so you should be able to target and utilize any income surplus for your plan. Reduce your non-essential spending and shop and manage your money a little wiser and you will be surprised at how much extra money you can come up with each month. Or perhaps you can pick up a little additional work on the side that will allow you to have that extra cash when all is said and done. The important thing is that you pick a reasonable fixed amount to send in to your account each month and do it consistently. If it's only $300 a month, that's okay. If it's $1000 a month - Great! Just stick with the plan. (For the purposes of this article I am going to use $500). Do the math and you will see that just sending in $500 dollars a month over the course of one year will add $6000 to your account. You will see why this monthly infusion of extra cash is important to your account building strategy as we go on.
Adhere To A Trading Plan That Is Reasonable And Obtainable. Now we are going to use the power of short-term stock trading to help us build our account even more. We have to adopt trading goals that are both reasonable and obtainable, and employ them on a consistent basis. The problem that I see with most traders is that they get greedy and impatient. They are always swinging for "home runs" attempting to make large sums of money very quickly instead of adopting a more conservative "base hits" mentality and concentrating on earning money in small but consistent quantities. What if instead of trying to hit the ball over the fence each time… we merely made it our goal to capture 5% on three winning trades over the course of a month utilizing our full account. That doesn't sound too unreasonable. For instance, if we take a trade on a $25.00 stock we can sell at 26.250 for a 5% percent profit! That's only 1 ¼ points! How about a $50.00 stock? A 2 ½ point gain will give us a 5% return. With a $75.00 stock we can take a trade and sell at $78.750 (3 ¾ points) to meet our 5% objective. How often does a stock make a 5 percent move? The answer is…quite often! The typical Swing Trade, if entered at the correct time, will easily allow you to capture a 5-7% gain typically in the course of the next 3-5 days. If you can learn to enter a trade accurately, you should not have any trouble achieving three of these winning trades over the course of each month.
New Stock-Signal-Pro Calculator Will Help You Project Account Size
Use A Stop-Loss On Every Trade. Simply put, at no time should you own a stock and NOT HAVE a standing Sell Order in place. Always Place a Protective Stop-Loss Sell Order Immediately After You Buy A Stock. You should always wear a seat-belt in a car, have a life-jacket on in a boat, use safety ropes when rock climbing and wear a safety hat in a construction zone. These are all mechanisms designed to prevent personal injury. The Protective Stop-Loss has one purpose and one purpose only, i.e. to PROTECT AGAINST INJURY TO YOUR ACCOUNT. When you BUY a Stock you risk catastrophic loss to your account. I can't stress how real this threat is. Imagine owning a large profitable farm in Kansas that's completely torn to bits and leveled to the ground by a powerful killer tornado. I hate to be so graphic but this is catastrophic loss. Imagine having taken a trade in Enron back when it was up in the $80s failing to use a stop-loss. As the stock traded lower and lower you froze - unable to take the loss - hoping it would eventually go back up. One careless trade left on its own... can wipe out years of hard work and erase all your savings into thin air. A simple stop-loss placed at the correct point would have prevented this loss and you would have your money to continue to work with. Remember a stop-loss is a mechanism to get you out with minimal injury when things don't go as planned. Many times your very next trade will make up for the small loss just endured. Stock-Trade-Pro provides you with a special selling calculator which will compute your exact stop-loss placement for each trade. No guesswork involved. The end result, a protective stop-loss placed not too close and not too far.
Time Your Entries With Precision And Make Getting To Break-Even Your Primary Goal.
Of course you must attempt to TIME your entries so that a stock moves in your favor almost immediately after you buy it. That's what Stock-Trade-Pro is all about, PRECISION TIMING. Without accurate timing... your stop-loss, no matter how well placed, has a much higher probability of being hit resulting in a loss to your account. We always want to enter a trade and buy a stock so that the odds are in our favor and so that our stop-loss will NOT be hit. Remember, if we buy it prematurely... our stop gets hit and we take a loss. Also, the more accurate our timing... the more profit we can capture from each price move from our stock, because we get in earlier. If we buy a stock late in its price cycle, it may exhaust its move by the time we have to sell it. After you buy a stock and put in place your initial stop-loss your first and foremost goal is to move your stop-loss sell order to BREAK-EVEN STATUS. The Break-Even Price is Your Buy Price + the amount to cover your commissions. The reason the Break-Even Stop-Loss is so important is that once you have it in place, you essentially have your money working for you in the stock market RISK FREE. Worst case scenario is that the market turns against you and you get stopped out of your position. The TIMING was not correct and you got your money back. Look at it as a complete refund on something that didn't work the way it was supposed to, something you expect from any product you buy. We want to keep the account growing in only one direction… UP. This simple practice will help you in minimizing loss to your capital as you build your account.
Know When To Sell Your Stock For Maximum Gain On Each Trade. Too often short-term traders will buy a stock at the correct time but miss a good profit opportunity by failing to sell at the opportune time. Many sell too early, missing out on additional gains... others wait too long and lose out as the stock comes back down in price. In certain situations 3% on a trade is all you're going to be able to capture. On other trades, if you sell at 3% the stock may make a 10% move. Its important to have a clear idea of reasonable price targets for each trade that you take. Remember, your goal is not to make a killing on each trade, but to reach your cumulative percent target for the month over several trades. Stock-Trade-Pro has a Selling Strategies Module which give you 8 different selling techniques based on the trading circumstances. Each one is designed to help you get the maximum return for each trade that you take.
Trade With Your Entire Account - One Stock At A Time. The final thing we can do to build our account fast, is to trade with our entire account balance, ONE STOCK AT A TIME. This may go against most people's thinking and appear to be risky. You might say.. "Why put all your Eggs in one Basket?" First we can trade more efficiently, having less to manage. Remember our goal is to capture 8% - 10% -12% on our entire account per month. It will be a lot more complicated to arrive at this goal utilizing multiple portions of our account through numerous trades over the course of each month. (We'll spend more on commissions as well) It's much easier to shoot for small obtainable profits based on our entire account. So if our goal is 10% a month, we can hit that goal with 4 trades of 2.5%, or 3 trades of 3.5%, or simply 2 trades of 5% - taken with the full power of our trading account. If you have $5000 in your trading account and are going trade a $20 stock simply purchase 250 shares and manage that trade until completion. Then move on to the next trade. It doesn't make a lot of sense to try to trade 2 or 3 stocks at a time, it just adds confusion. Most people would ask, "Isn't it better to diversify a little?" The answer is no. Diversification doesn't buy you anything... it just leads to mediocre results. Most stocks track general market momentum in many instances, so if the market is going to go down you just end up with 3 losers instead of one.
Summary No one cares more about your hard-earned money than you do. No matter how "good" a broker is, you are NOT going to build wealth by handing your account over to someone else to manage. With a regimented money management plan such as the one I just described and proper trading techniques you can build your account size fast. If you simply add money to your account each month and trade accurately, safely and consistently targeting small gains... you will be amazed at how much money you can accumulate over the course of a year. As you progress, you will see $1,000 turn into $2,000, then $2,000 into $5,000, and $5,000 into 10,000... the larger your account grows, THE FASTER YOU MAKE MONEY. Bear in mind, you don't want to over-trade. Adopt the spider's approach. A spider doesn't chase insects around frantically. Instead it builds a web and waits quietly in the corner for a bug to get trapped. Then and only then it pounces. It should be the same with trading stocks. Wait for the proper conditions signaling the highest probability trade each time and then make your move. Building your account over time is simply performing the same small tasks over and over.
How do you eat an elephant? One bite at a time.