No, I am not currently considering a loss on any of my positions. I have stops in place for all but two of them... those two are in the absorption consideration. One is a penny stock and the other is my option trade.
I started trading with a small account, and I still consider that I am using a small account even though it is larger than when I started. I read emails, blogs or accounts of people who are getting jittery over a position that they have that is not moving for them as expected or when expected. If the emotion is strong, then sizing down is in order...or re-thinking whether trading is a good idea in the first place. I have resigned myself to the fact that I could lose every penny of my trading accounts and, while I might miss the money, it will not affect any part of my personal and financial well being.
One of the first things that I threw out the window was expectation. No matter what I expect, the market is going to do what it is going to do and, with very very few exceptions, I will have a negligible affect.
This is where the pit of the stomach comes in.
If I find that I have that nasty feeling in the pit of my stomach then I probably shouldn't be trading that particular trade for a few reasons. Perhaps the size is too big, the possible loss is too big or the trade was placed with a hope or expectation. I have had a few of those trades where I felt terrible watching what was happening and realizing that my money was flowing in the wrong direction.
I am at a point where, while I still care that I may lose money, I know how much the maximum loss will be and I have already accepted that as a fact... "prepare for the worst and hope for the best". I would rather prepare for the worst and plan for the best...otherwise the best may come and go and may be missed altogether.
Jeff.
Questrade, My direct access discount broker.
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I have been trading buying only high yield dividend stocks with some success. My thinking is if the market goes south there will probably still be a cash flow I can rely on until a rebound occurs since a companies underlying value remains even though the market may decline. I have experienced this through the great recession. I move in and out of stocks very quickly and will either take the dividend or the capital gain. So far so good. I am averaging about a 30% return. YOur thoughts?
ReplyDeleteFirst, if it is working for you and meets your goals then what I say means next to nothing.
ReplyDeleteHaving said that, I am confused.
"buying only high yield dividend stocks "
and
"in and out of stocks very quickly"
and
"dividend or the capital gain".
These do not mix in my thinking. Either you buy high yield dividend stocks for the dividend and/or for the capital gain. In and out quickly in an attempt at dividend capture is unlikely to produce 30% over anything other than one or more years, if then. A price dip of 5% will wipe out most, if not all, of your dividend gains and is probably no better than a 50/50 shot. I investigated this along the way and it never made it past the drawing board in my plan. No edge. Long long term, perhaps, but that discounts your "in and out" quick.
Biggest issue I have is that, while your plan may be fine and DRIPping is along this lines but with a buy and hold ideal, the market is not predictable. What if when you wanted the money for income coincided with the next recession?
OOPS!
Check out my current posts to get more of a sense where I am with trading right now.
Jeff.