In reality, I have about $10k to trade with to start out. I will likely distribute this between four accounts and do a combination of swing trades, and up to 12 day trades a week (using the separate accounts to avoid the pattern day trader rule).
To practice swing trading strategies, I have set up one virtual portfolio with $10k on VSE. In general, my parameters for this practice account will be: 1) Limit of 25% of my capital into any one trade; and 2) Hold on to stocks at least one or more days, unless they reach a stop limit the same day I make the purchase. I’m still working on my “Rules” for what constitutes a good set-up for swing trades, but I described in general the direction I’m heading in my first post.
I took up my first positions in this portfolio yesterday. These first purchases violate my 25% limit by using almost half of my capital for the two trades. In both reality and in this practice portfolio, in the future, I won’t put that much money at risk as its a sure recipe for early trader retirement.
F: I’ve been watching and trading Ford stock over the last couple months with some success in my real account. Essentially, its been channeling sideways between $2 and $2.2 with support at $1.80 and resistance at $2.45. Every time it dips below $1.90 it is usually there for only an hour and then bounces back up. I put a limit order in for $1.89 and got 2,000 shares. It closed at $2.02 with a couple extra cents in afterhours. The risk here is a big gap down on Monday morning. I think all the bad news was released on Friday, and the stock will go back to its $2 to $2.20 pattern.
GM: General Motors’ stock was halted from trading for a half hour or so midday on the exchange when their release of earnings was delayed. The stock plummeted afterwards down to almost $4. It seemed to stabilize there, and I got 1,000 shares at $4.12. It spiked up to $4.95 at close, but lost a half buck in afterhours. Very volatile. This stock could tank quickly with a panic selling, and has a bigger chance of gapping down on Monday.
Both of these stocks I will be watching closely when the bell opens on Monday. I have trailing stop orders to take profits if these start to sink again, but if they gap down the stop orders could be ignored. In real life, my stakes in these shares would of been half the level that I have in these practice trades, and I will follow that rule in my virtual swing account too from now on. In reality, I would of used a round trip trade to exit GM at close when it was spiking; this stock is too volatile right now and going cash on that one is a good idea. F is more stable and I would of held it over the weekend in real life. We’ll see the results next week in my virtual account.