Trade The Journey

Trade The Journey

3% Return

Another week of rising infections, another week of precautions and bankruptcies.

The pressure to return to normal is mounting from state to state. Everyone is eager to return to some sense of normalcy. Some people have taken matters into their own hands by “protesting.”

Some have stormed the state capital with assault rifles; scary isn’t it. Adamant that freedoms are being taken from us under the guise of safety and the well-being of others, they’ve taken to the streets. The stalling of the economy has stirred feelings of desperation and a transformation of the economic landscape.

Demand is said to be pent-up, which I will agree to be true.

However, supply and demand consist of many variables, including price, customer sentiment, and now safety. Safety, a variable only affecting demand and supply in but a few industries now reigns supreme, all but halting supply.

People will act according to the message received from the environment around them.

As the country continues to become corporatized, the wool is pulled over eyes in times of upheaval. I wonder if the small business owners become the new employees displacing the original workforce, they’re entrepreneurial spirit contributing to a new work skill, innovation.

These are tough times, and in the coming weeks, the resolve of this country will be tested. A new level of competition for jobs that will be decreasing in number due to technology and lack of demand. Some question if the economy will recover from this gut-punch or emerge permanently scarred.

 

How important is leadership?

In the depths of hell, a true leader will lead the troops towards the pastures of safety covered in God’s Grace. With both eyes as one, we are led towards the destination navigating the obstacles and challenges.

Not everyone is capable of leading and placing the needs of others before themselves.

This is a global slowdown of epic proportions and will enter history as a time of significant change. Industries are on the verge of collapsing, companies are scaling down significantly, and there is growing fear and panic. Fear and panic will collapse the economy.

Economies around the world have shut down, and even China witnessed a drop in its steady growth of years. Even if China can ramp up production, other countries haven’t yet reached the point of resuming its level of exports. The standard of living is rising in emerging countries, and with that comes the seeking of personal freedom.

If China can fully adjust to the times, then they will remain either a formidable ally or enemy.

 

Now to my trades.

After my first attempt at swing trading ended successfully, I was encouraged to make more trades. Out of eight trades, I had a return on investment of 3%. Nothing to brag about, and I earned a return equal to long-term treasury security two years ago. Due to long-term treasury securities trading close to 1.25%, trading is profitable right now.

Revisiting my performance for the week, I see glaring similarities in both the preceding week’s losing trades and this week. Over the last two weeks, I had an equal amount of big gainers and losers that contributed to a return of 3% this week and 3.14% the previous week.

In both losing trades, I failed to see that sentiment in the stock had changed. In one trade, I was so impatient I brought the stock in the after-hours market at its high. The stock dropped, why? The company issued more stock while the stock traded near its high to raise money. In the second losing trade, again, I failed to keep pace with the news.

The stock dropped, and I didn’t know why. After exiting the trade, I clicked on the news section and found that the stock received a downgrade in its rating. The analyst forecasted a drop in the value of the stock close to almost ten dollars, and it caused sentiment towards the stock to turn negative.

With experience, I am learning to cut my losses and never look back. When I’m in a position, I must track the news, especially in the current economic climate. There’s still a slight hesitation due to me having trouble accepting that every story doesn’t have a happy ending.

Life isn’t fair, and neither is a trade. Each day, I’m trading the perception of a stock, attempting to profit on changing sentiment. I have to accept this.

The most challenging aspect of trading is timing and knowing when to hold or fold. Luckily, I haven’t suffered any losses causing me to question my trading aspirations.

One pattern I particularly like trading is the breakthrough of a resistance zone. Depending on the stock’s momentum, this could be an excellent trade to hop aboard once the stock breaks through its resistance. With the market’s volatility, these types of trades can prove extremely profitable.

Volatility means that your losses will also be magnified.

As mentioned in the last post, this is a harsh environment to gain trading or investing experience. You must be prepared to lose the money you are investing or trading with if you decide to participate.

Emerging news has the potential to rock the markets due to the fragility of liquidity in the market now. It’s a great time to make long-term investments, as many companies are trading below their value. Companies with a solid name and balance sheet will rise from the ashes richly rewarding investors for their faith.

Identifying companies with secure cash and debt position mean that leadership must also be durable. This type of company will maintain its value even if it was hard by the Coronavirus.


This past week in Review:

Controlling yourself in times like this can be challenging. If you’re at home, you have several options to decrease your level of boredom, spending can be one of them. So far, I’ve maintained my discipline of saving first, investing second, and spending third.

Sometimes when I spend, I feel as if I am violating rules. I’ve been able to keep my frivolous spending to a minimum. Most stores are closed, and since I stay home on most days, I don’t eat out.

This past week deserves a grade of a “C” of steady improvement.

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