Thursday, November 18, 2004

Plotting My Next Move ...

First - I am not a stockbroker. I have no training in this. I have lost money doing this. I did this on paper for 6 months before I bought the first stock. I am not telling you to make this trade!!

I thought you might enjoy seeing the process I go through with a real trade. Again - if it just doesn't feel right in the morning, I may back out. Whatever happens, I'll report it tomorrow when I blog again.

And again, my trading account is money that we set aside that we do not need. We have paid our bills, given tithes and offerings, and invested in our 401 K and short term savings accounts. We take a little each week after all that is done and put it in this trading account. I have sacrificed for this - our home still isn't completely furnished and I don't have a lot of clothes. But you don't hear me complaining!!

I just checked investors.com and saw that GCO was up heavily on high volume. I checked the score card on that site and it's good. I learned this is a shoe company and my husband buys their shoes and loves them. Even better!

Next I went to BigCharts.com and checked out its chart. I like to look at the graph a certain way and that site gives me the ability to see information in a way that makes more sense to me.
I LOVE this chart. It had a huge jump today gapping up (you'll see a blank space between where it closed from the day before and where it opened this morning.) Many times, the stock will continue to rise a second day and this is what I'm hoping will happen. There are no guarantees and that's why I checked to make sure this was a sound company.

I want to make a 2% profit then get out. The stock closed yesterday at 29.36. You can see from a quick calculation that it only needs to get to 29.94 in order for me to realize my 2% gain. I need to consider the cost of commissions. My on-line broker charges me $11 to buy stock and $11 to sell. I have about $1500 (actually I just saw that the $500 we sent in at the beginning of the week has also cleared so I'm going to do my calculations with $1500. You'll see why in a minute.) Rounding up to $30 a share, I can buy 50 shares. I divide $22 by 50 shares. I get .44 which I add to the total. As soon as I can get to my computer after the market opens, I'll check my fill price (the price I actually bought at) and add another two percent plus .44 . I'll then key in a limit order instructing the on-line broker to sell my 50 shares at that price. ($30.38 if the I get to buy at its closing price of today.)

I'm going to key in an order to buy at the market. This is risky but I have to go in the office tomorrow and I can't buy stocks on line from work. It's risky to just buy at the open as one usually doesn't get the best price. But that's the price I pay for starting as a very little fish in a big pond! That's also why I'm leaving money in my account - I don't actually know how much it will be selling for in the morning and I want to make sure my order executes.

I usually get up at 5:30 am to go the gym. I'll turn on CNBC while I lace up my tennis shoes and look at the futures. If the DOW and Nasdaq futures are up, I let the order stand. If the financial climate seems bad, I may cancel the order - I'll have till 9:30 in the morning to cancel.
If horrible news surfaced after 8, I might drive home and cancel the order (I live 3 miles from my office and I'm allowed to come and go to take care of an occasional errand.)

I made my last trade on a day when the market was down. It just "felt" right - I keyed it in at lunch after things had settled down and this stock was on a tear. I was in and out in one day with a solid 2% gain. It's really an art judging when to get in and even then, sometimes you are just wrong. In the end, it just needs to go up a small amount and hopefully, it will!

Oh and how much money will I make tomorrow if this goes as planned? A solid $30 for all my work. But this is the beautiful part - when it goes as planned, 2% is 2%. Whether I get 2% of a little or 2% of a lot of money, it really doesn't matter. If the stock hits my price, it will sell whether I bought 10 shares or 1,000. Once that fact really sinks in, you'll never be the same again!

I'm off to do the deed - watch the stock tomorrow and see if you think I got in and how I did! Any bets??

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