Investing Adventures

Over the past few days I’ve come to realize something as my portfolio’s reaching for all time highs. I am a trend trader, not a swing or long or day trader. A trend trader. As usual, let’s see what Investopedia has to say about it:

A trading strategy that attempts to capture gains through the analysis of an asset’s momentum in a particular direction. The trend trader enters into a long position when a stock is trending upward (successively higher highs). Conversely, a short position is taken when the stock is in a down trend (successively lower highs).

Over the past year I’ve tried a little bit of everything. I started stock trading on Zecco. Buy and hold. Didn’t work and was extremely slow, especially with a small account. I could have tried to trade penny stocks, but the stigma of the pink sheets was, well… crummy. I found options and started trading them exclusively about a month after my buy and hold phase. Jumped onto thinkorswim’s platform in November after finding the Option Addict .

I learned the ways of the technical analysis over the following months while attempting to trade options here and there. I’d try picking them at what I thought were decent entry points and exit at predefined percentage gains. And yet, I nearly blew my account out. About a month ago, completely out of nowhere, a light bulb went off. It was something so easy that anyone would be surprised why they didn’t think of it earlier. And it all led back to the main reason why those few traders out there are the successful ones. It’s all about the risk and money management. The minute you learn money management, this game becomes much, much easier.

Money management (possibly) under my belt, the next step was to increase the war chest. Over the past couple of weeks, I’ve been placing trades left and right, tapping my account out on multiple occasions. Never had I traded so many contracts and so many positions all at one time. But so far it’s been fairly comfortable. And how have I been doing that? Riding trends. I am not a day trader. I’m not a short term trader nor am I a long term trader. I am a trend trader. I pick my entries at support/resistance and ride the wave.

Example? Look at XL Capital (XL).

Will it always be that simple? I doubt it. Am I just lucky? Perhaps. But I have noticed one thing. Even three months ago, I would have sold and been done with the trade. Now? I’m finally starting to accomplish what everyone talks about. Let the winners run and cut your losers short. So far, XL’s been a winner. And the best one I’ve had to date. My identity’s been found. I am a trend trader.