Archive for March 2010

Helium and Gravity Trading and Portfolio Protection

March 14, 2010

A trader/investor (TI) can learn a lot from charts. By tracking (every trading day) a six month chart and four important technical indicators:

  • chart trend – look at the 13 day, 50 day and 200 day exponential moving averages (ema)
  • stochastic
  • MACD
  • Force Index (Read “Welcome to my Trading Room” for more information)

A TI can develop confidence when placing trades.

Some investing adages that the TI wants to remember include “the trend is your friend”, and “bulls make money, bears make money, and pigs get slaughtered”. On a very short term basis (one to two days holding), the Direxion 3X leveraged vehicles are good trading vehicles in a bullish, bearish or neutral environment. The Direxion 3x use leverage and are prone to value/time decay, and should not be used for buying and holding, only trading.

Some guidelines:

  • Invest about 75% in equities and the remaining 25% in money market accounts or cash for trading and portfolio downside protection; this will allow the TI to trade bullish, bearish or neutral (specifically alpha neutral – explained in a future post)
  • Of the 25% in money market or cash, trade about 33% based on the trend using Direxion 3X leveraged vehicles.

Using a two – three day change in slope of these indicators, the TI can trade based on whether indicators are bullish, bearish or neutral, as the following chart example shows. To discuss, send me an email at:

Email  –  future.value.max@gmail.com

Advertisements

Trading, Investing and Portfolio Insurance

March 14, 2010

Recently, many of my friends and family have been discussing how to invest and protect their hard-earned money to save for their retirement, children’s education, weddings and a host of other activities and events that require large sums of money. Most are concerned about market swings and corrections, and many have discussed whether they should turn their money over to a full-time investment advisor. I do not know what’s best for any one individual, but I have always felt strongly that I work hard for my money, and I do not believe that anybody cares more about my money than me. For this reason, I have been a student of the equities markets over the past two decades.

My father nurtured my interest in investing in 1987, and my father-in-law introduced me to trading in 1997. Over the years I have made money and lost money using a combination of stocks, mutual funds, and options. As my children get older and college is now in the single digit years away, my interest has turned to better managing and controlling investment risk and maximizing investment returns. Over the past twenty years, I have morphed into a trader/investor, or TI for short.

Both investing and trading require strict discipline, using a longer timeframe and shorter timeframe respectively. As a trader/investor I use three primary methods to mitigate portfolio risk and maximize returns:

  • dollar cost averaging (monthly, long-term investing)
  • value averaging (monthly, long term investing)
  • trading (as dictated by the “helium and gravity method”, explained in a future post)