VT - a virtual buy and hold

The buy and hold strategy applied.

Note that there are three posts to complete the trading and comparison.


A little historical trading, virtual if you like

I am not going to note the chart for this as it wouldn't be clear and these are very straight forward trades anyway. This one almost has training wheels on it. I will put prices on the trades but they will be skewed against the trades with late entries and rough exits. I will outline two methods to trade this stock. Both will work, I did not figure this one out ahead of time but I have a feeling I know where the comparison will go....no not where you expect for this stock....read on.

Buy and hold

Strategy - Buy a small starting position, 100 shares and add to it at each time the price hits the buy target...the lower trend which is the 200SMA line.

• The 200SMA (green) line can be used as a support line very often and with good reliability


• 1st trade - Mid Aug, buy 100 shares @ $10, set stop below the 200sma by $0.50 ($8.50)


• P/R = unknown as the goal is not a target, potential loss off the start is $150


• 2nd trade - late Nov, buy 100 more shares @ $11.00, stop is at $9.80


• the stop is moving up every once in a while to stay roughly $0.50 under the 200sma


• position = 200 shares average cost = $10.50


• P/R = unknown, potential loss at this point is $140


• 3rd trade - mid Jan, buy 100 more shares @ $11.50, stop is at $10.40 (give the drop down some room even though most might not have anticipated it, it only would have taken $0.05 and the stop is only being moved occasionally so it would likley have been fine)


• position = 300 shares, average cost = $10.83


• P/R = unknown, potential loss is about $129


• 4th trade - Early Feb, 100 shares say $11.50 again, stop = $10.60


• position = 400 shares, average cost = $11.00


• P/R = unknown, potential loss is about $160


• 5th trade - Mid Mar, 100 shares $12.50, stop = $11.00


• position = 500 shares, average cost = $11.30


• P/R = unknown, potential loss is about $150


• last trade - mid may, 100 shares $13.00, stop = $12.00


• position = 600 shares, average cost = $11.58


• P/R = unknown, potential loss is about $0, finally got to the point where the stop is above the average cost. stopped out profit would be $252 at this point and can only go up

The final buy and hold tally to date

600 shares, average cost of $11.58, yesterday's close = $14.73, paper profit = $1890.00. The capital used for this would be $6948.00, the entire capital plus some margin. There are no realized gains at this point.

Buying 600 shares right off the bat would have been = $2838 BUT the potential loss off the bat would have been $900.00. It would have also required $6000.

JD.