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This blog is primarily about Making Money Online but once you have made money, you need to do something with it!
For me, I've been messing with the stock market for a while and have recently developed a strategy that has been doing pretty ok for me this year.
My Stock Trading Strategy:
Use the Right Brokerage Account:
First, I opened my stock trading account through Wells Fargo. This is because when you're a PMA customer (you need $20,000 or more in the bank across all accounts at all times I think it was), you get 100 free trades per year!
So instead of paying $7 per trade through Scott trade you get essentially $700 bucks in trades for free per year. I've never been able to come close to using them all yet. 
Follow Your Stock Closely
After that, I've been following the stock of companies I actually have interest in. I have checked the stock price of Google, Apple, Valueclick, Wells Fargo, and a few others every week day for over a year. I feel like I know and understand how the company works in the stock market.
I have grown to know what is a good day and what is a bad day for those companies, simply by studying their patterns.
Buy In
Next, I buy in. Whatever amount you can afford to risk. This is not retirement, this is not everything I have; this is money that I want to risk in hopes for better gains.
Now that I know how the stock works and have bought in (I bought in a while ago). I buy and sell in chunks.
Buy / Sell In Chunks
I have a preset percentage in my head of increase that I would like to shoot for. Let's just say that I want to shoot for 5% ROI on my investments.
Every time my stock increases 5%, I sell off 1/6th of my stock. If I have sold all except 1/3 of the stock, I keep that 1/3 of the entire holding for long term growth. On the converse, when my stock goes down 5% I buy in 1/6th more stock.
Let's use numbers for ease. Let's say I have 200 shares of Google (GOOG). It raises 5% over the month. I sell off 33 shares. It raises another 5% I sell another 33 shares.
Then it goes down back 5%. I buy 33 more shares.
This strategy is just what has been working for me. Some people do it completely differently, but I particularly like this method.
If you have any good tips for how you trade stock, I'd love to hear it as well.
Disclaimer:
Lastly, read the disclaimer. I'm no expert, don't listen to anything I say, blah, blah. Anytime you enter into the stock market you risk losing money and it's your decision 100%.
Related Posts:
The stock market is a very risky business. You need to follow and know every single detail about a company. One wrong decision and you could be losing lot and lots of money.
I think you should ONLY invest in the stock market if you’ve got money on the side.
Not only that. You have to know a lot of things about the ins and outs of economics. Things that affect the flow of market and so on. If you hit the target though, you’ll be flowing with lots of moolah!
I used to have an investing strategy, but it was taking up a lot of my time. I had actually written a script to poll different public opinion data to help analyze stocks & determine which would rise. Once the stock was up 33%, I sold my original buy-in amount & kept the rest. I outlined this in an old blog post
However, now I just buy SPY each month. It’s more for tax savings than a retirement plan.
Nice post. I used to always be on top of the stock market until I got into affiliate marketing. Maybe one day I’ll jump back into it.
I’m going for Scottrade, only because I’ve become accustomed to them when I was into the stock market back then.
None-the-less, when it comes to buying a stock, are you a fundamentalist or a technical trader?
Since I’m a math teacher I’m going to ask you about your GOOG example of selling 33 a second time.
What I mean is if you sold 33 then you’d have 167 shares invested which would mean actually selling 28 if you sold another 1/6.
OOORRRR
Do you mean you have your 1/6 of 200 and if it goes up 5% six separate times you would sell it all? In this case your stock went up 34% from your initial buy. In this case you ended with a total ROI of 14% after selling 6 separate times.
Very interesting stuff. I’m just wondering if your 1/6 and 5% is all based off of your initial amounts or if it changes after you buy/sell.
I ALWAYS set about an 8% hard stop loss order the second I buy , then use trailing stops to lock profits and protect gains. Takes all the emotion out and takes much of the risk out of investing.
Hi JV, good to see your spreading to different “industries”. I myself am learning to trade professionally and so far so good!
All I can say is, if it works for YOU, then keep doing it. The key is to feel confident and comfortable in the method/s you use. That is important. Also to mention that trading is trading, no matter if its stocks, shares, futures, currencies, gold, and what not. Its all Supply and Demand. Its all about identifying “key” zones of order flow. Zones where most institutions, investors and the like have their orders, in essence an accumulation of pending orders in the market. Its a case of going WITH the flow (banks, institutions, BIG investors) vs going against the flow.
Like Dusting says, are you a fundies or a techie, or both?
Also Money Management is extremely important. Having a “constant” risk % per trade will help when the tough gets going.
However, its an extremely rewarding business (if treated as such) and extremely lucrative over the long term.
My 2 cents.
The rules you have set change per the stock and the market and not in concrete I hope…
Thanks sharing these strategy, i need to learn more about that.
Denis
And after you’re comfortable with trading stocks, move into markets with real liquidity and transparency like currencies. Get a real platform that enables trailing stops and multi-tiered limits and stops rather than waste time monitoring and adjusting orders with 1990s-era interfaces (and most likely executions).
It’s really a difficult to do business of stock market as it has more risk associated with every process.
Yesterday while watching CNBC, I actually learned that Q3 was the best quarter for stocks since the late 90’s.
With the economy possibly, slowly but surely recovering, who else thinks that this may be the best time to invest their money into stocks knowing that its possible for a good return?
First time reading the blog – cool offer from wells – but Bank of America has one where if you have a 25k balance you get FREE TRADES!!
First time posting ^.^ Love all of your stuff btw thinking of starting my own forex blog. Don’t know how I ended up here though XD.
But back to the topic. I’ve never been into stocks, but I’ve been trading currency professionally for the past 4 years. They’re a bit different, but the concept remains the same.
From what I read you’re a long term techie. Long term as in once you enter the market its either you hit the ROI target/hit your stop loss. It’s an easy almost fail proof strategy that a lot of rich people use and I personally know many people who use it. There’s really nothing wrong with your strategy.
But if you want to be a bit more daring, and try to take advantage of those ups and down swings that you see every second, then shoot me an email at jiykong@gmail.com and I’ll send you a couple of read that will help you out.
I know this wasn’t a tip, but when I tried writing a tip, I found myself writing wayyy too much XD.
Your doing great in the market man, GL
Anybody’s welcomed to email me to and I’ll gladly help.
It sounds like a good idea. You will soon essentially be freerolling on your investment.
Don’t believe anything you hear on CNBS.
Interesting strategy. While this post is a bit off topic, I think it is suitable for this blog. When you do make some money, you should wisely invest it. The stock market is a great place to do just that. Personally I would be a little wary of investing after seeing the big losses when the recession hit.
Thank you for sharing your stock market strategy. Many people are too intimidated to invest in the stock market on their own. If we follow your strategy, I’m sure we could all make some money through stocks.
One of the best advices I can give to those who are into the stock market is to not let your emotions get to you alot of people sell their stock really low, and buy high because their emotions get the best of them. I’ve been learning alot about Stocks in my Money and Banking course are at the University.
Till then,
Jean
You have a Interesting strategy. While this post is a bit off topic, I think it is suitable for this blog. When you do make some money, you should wisely invest it. The stock market is a great place to do just that. Personally I would be a little wary of investing after seeing the big losses when the recession hit.