The Double Dip; Taking it Fast

World Wrestling Entertainment (WWE)

Bought 900 shares at 12.29 on 11/13

Sold 900 shares at 11.68 on 11/24

Net Loss: $549

Trina Solar Limit (TSL)

Bought 1000 shares at 10.30 on 11/25

Sold 1000 shares at 10.82 on 11/26

Net Profit: $520

Trina Solar Limited (TSL)

Bought 1100 shares at 10.07 on 11/28

Sold 1100 shares at 10.14 on 12/5

Net Profit: $77

In my last post about stock trading, I bought and sold WWE stock for a profit of $287. Well, I mistakenly thought that lightning would strike twice and decided to invest again. I assumed that the time to buy was the same as before, and bought it at $12.29, which was .23 lower than when I profited the first time. But the stock continued to tumble and is still under $12.29 as I write this. So I decided to double dip again with TSL. I made $520 on the first trade, and went in again a couple days later when the price went down to the same level. Stocks absolutely tumbled on the December 1^st thanks to the stuff going on with OPEC and the falling price of oil. At one point, I was down $1000. But energy stocks like TSL made a small comeback and I was able to sell it for a small profit. This was pure luck, as it could have easily stayed at the price it’s at now (8.59).

Lesson Learned: Double dipping doesn’t work without parameters. The low point for a stock can be different as times change. When I see that a stock takes a big dive, I have to look at why. I also have to look at whether other stocks in that category have also gone down, as well as stocks overall. There are so many factors that decide why a stock goes down, and it’s important for me to understand this when trying to predict a stock’s valley.

My brother Alex gave me advice a couple months ago. When I told him that I was gonna start trading stocks, he warned me about investing so much money ($10,000) to start with. The key to a successful strategy, he said, is in the percentage and not the profit. And he’s absolutely right. The purpose of any stock strategy is to win more than lose, so a rookie should be able to invest $100 into the stock market and learn the same lessons as someone who invests $10,000… and he doesn’t have to risk losing so much money. It’s great advice. Will I follow it? Take a wild guess…

I’m not very bright. I’ve never been, and I don’t fool myself into thinking that will ever change. When I find something that I’m interested in, I do my best to find a successful pattern and then go all in. I saw, for example, that real estate was a good field to invest in. I was a teacher at the time, but wasn’t making enough money to comfortably support myself. So I saved up as much as I could, quit my job, and then moved to Smalltown to buy my first property. I had no idea what I was doing, but I had a general idea of how things needed to be done if I wanted to be successful at it. I feel the same way about stocks. I have my strategy set. It’s not a great strategy that will make me millions, but it’s good enough so that I should win more than I lose. That makes me comfortable enough to go all in and really get my feet wet. So I transferred $10,000 to my Scottrade account last week, and will most likely make my first real trade on the second week of January. I’ve learned enough from my simulation stock trades… it’s time to do it for real.

P.S.: I spoke with Alex this week and he reminded me of a Nathan Michaud DVD that he swears by. He said it'll be what I need to truly be as successful as I can possibly be in stock trading. The DVD, unfortunately, is $997! I know it's probably worth it, especially based on Alex's recommendation, but it'll take a couple weeks to bring myself to a point where I can spend that much money on a streaming DVD.