What you need to Lunch Break Invest
There are a few things you will need to use the Lunch Break Investing strategy. If you are reading this, chances are you have most of them.
1. Computer Access (I know, duh!)
If you do not have easy internet access then a laptop or netbook will be useful. For security reasons I would recommend mobile broad band. This is the most important item on the list.
2. Stock Watch List
This is your master cheat sheet. Put it somewhere you can easily access it. List the stock symbol and buy price. When the stock is close to your buy point, buy!
3. Written Strategy
It must be written and accessible. Following your written rules will eliminate some emotion and will protect your capital. Never guess on your rules. Write them down and follow them!
4. Cell Phone
Not really a must, but can be very useful. A smartphone, like an iPhone, is not a replacement for a good laptop/netbook, but it can give you quick easy access. I have bought stocks sitting in my car waiting on my kids to leave school. Getting text message alerts on stocks is also useful.
Post your list of necessities in the comments. I would love to see how everyone is using technology and gadgets to do better investing.
Happy trading!
Trailing Loss Limit Percent vs Dollar
Trailing loss limit is a great option for people who can’t watch their stocks. The problem I have run into is which to choose, percent or a base dollar amount. I love percents when it come to profit, but is it really the best option for a loss?
Example:
You buy a stock at $10 with a trailing loss limit of 10%. The loss limit would be $1.
Let’s say the stock makes a move:
$12 – loss limit of $1.2 or $10.80 : Profit of $.80.
$15 – loss limit of $1.5 or $13.50 : Profit of $3.50.
Now let’s look at the dollar limit:
$10 with a trailing loss of $1.
$12 – loss limit of $1 or $11.00 : Profit of $1.
$15 – loss limit of $1 or $14.0 : Profit of $4.
The numbers are convincing. I can speak from experience that the percent can bite into your profits quicker than the dollar amount. The biggest drawback of the percent is that it gets bigger as your profits grow.
Good automation should never limit or sacrifice your capital and profits.
Happy trading!
Trailing Stop Loss
A trailing stop loss allows an investor to set a loss limit (dollar or percent) on their stock. As the stock trends upwards the limit follows. Example: If you set a $1 trailing stop loss on a $5 stock and the stock drops to $4, it auto sells. If the stock moves to $6, the limit is $5. This a nifty option that protects your capital without constant monitoring.
This is handy for you lunch break investors. Say you go to lunch and have a nice burrito. You find the dream stock that is going to make you millions. You buy! Just in case, you set a stop loss at 8%. Now this awesome stock grows and grows. Then one day, bang! It’s not a hot stock any more. Your trailing stop loss kicks in and sells at 8% under the last “up” closing price. Now you made millions without trying. Or in some cases stopped your loses before you lost a bug chunk of change.
Use trailing stop loss to protect your capital and profits.
Lunch Breaking Investing Rulebook
After careful consideration, I have decided to try a new investing strategy. I’ve found that I do not have time to use the traditional rules. My rules will have to fit my time constraints. In other words, it has be easy and simple enough to do during my lunch hour.
Here are my Lunch Break Investing Rules:
1. Only buys stocks on the watch list.
2. Must be trending upward.
3. Must have a trending sweep of at least 10%.
4. Buy only at the bottom trend line.
5. Set a loss limit (2-3%).
5. Set a trailing stop loss to 8% below the bought price (dollar amount on the stop loss, not percent)
6. Set a profit limit (5-10%).
6. Allow the stock to trend upward until trailing stop loss is activated.
7. Never break any of these rules.
8. Adapt my strategy as needed.
Over the next several weeks I will be expanding on each of these items. I will also concentrate on the automation and mobile techniques.
Comment and share!
Admitting Mistakes – Follow your rules!!
Here is my full confession to my horrible mistake. I did it again! After careful consideration and research, I bought 200 shares of a nice pharmaceutical company. I followed my rules:
Added it to my trading journal
Calculated my Profit Limit
Calculated my Loss Limit
Set my alerts for both profit and loss
The stock did just as I expected. It hit my profit limit. As always, when my iPhone dings it’s ding of profit, I cheer and do the “the profit dance”. But! I didn’t sell. The whispers of greed said, wait it could go higher. I missed the word “could”. Yes, dear reader, the spirits of trading punished me for not following my own rules. The stock dropped. My iPhone mournfully sang the tune of loss and I frowned and did the “loss shuffle” to my computer. It touched the loss limit, but didn’t go below. I was safe. I now promise the trading spirits that I WILL follow my rules and sell when my limits are met. Again, I have learned my lesson the wrong way.
Thanks for reading, check back later for a more light hearted and happy post. I promise!
Passion and the Stock Market
Picking individual stocks for a portfolio is not for everyone. If you are interested in investing, it’s worth the experience. Give it a try and if you love it, keep doing it. If you don’t love it, get out and find a different investment strategy like money markets or mutual funds. For an investor to really make money in the stock market they must have a passion for it. The stock market is a roller coaster with ups and downs. When you go up it’s the greatest feeling, elation with just a tingle of fear that it’s all going to crash. When it does crash, and it always does, it’s a sickening feeling that ties your stomach into knots and makes you doubt what you are doing. The doubt is the killer and passion is the defense. If you have the passion and excitement, then you too can make money in the stock market.
6 Excuses Not To Invest
1. I don’t have enough money.
Most accounts can be started for $500 or less. Use your tax return or start a saving account to save the money to start investing. Also see my post about getting started even if you make minimum wage.
2. It’s the wrong time.
The worst time to invest in the stock market is tomorrow. Tomorrow is too late. Today is always the best time. Your money can’t grow until you invest it.
3. Recession!
Remember the often used “Buy low and sell high.” Guess what a recession does to stocks; it pushes them down to the “low” point of the last statement.
4. It’s too complicated.
It can be. Depending on your investing goals and strategy. Of course, it can be so simple you can do it on your lunch break. Like me!
5. I don’t have enough time.
Like step 4, most investing can be done in under an hour. I do most, if not all of my investing homework at lunch.
6. I’ll lose ALL my money.
Diversify! Unless you have a string of bad luck and all the companies go out of business, you won’t loss all your money. Keep in mind one of the goals of investing is to persevere your capital. It’s ok to take a loss if it minimizes the damage one or two bad stocks can do to your portfolio. And remember, always have a loss limit.
Got other excuses you have heard and want to share, COMMENT!
How long to keep a stock at a loss?
First, always set a loss limit. Know when to get out when you are losing money. Depending on your goals you may want to set a 5-10% loss to trigger a sell.
Now if you are like me and when you got started you had no idea what a loss limit was, then you may have a few that have lost big. Here are 4 questions to ask before you sell:
Is this a long term goal/investment? The beauty of the stock market is that it does bounce back. Depending on the industry and the company, you could see it bounce back.
Is it a good value company? Do your homework. Is it a good value stock. This is a good sign it could bounce back.
How much are you down? If you are down over 25%, then it may be time to sell and take the hit. Keep in mind that farther it goes down the more it has to earn to bounce back to your entry point.
Can you off set your winnings with this loss? Taxes! Uncle Sam gives investors some breaks. One is that you are taxed on your profits minus losses. Check the tax law or a trusted accountant for more details.
If you have other suggestions, please leave a comment below!
Don’t count on your 401k
401k is the new Social Security. That comment is not a good thing. The reason anyone has a 401k is because we can’t depend on having social security when we retire. We will still be paying for it, but it just won’t be there. The people counting on their 401k to be there when they wanted to retire in 2008-2009 were let down. The recession killed many people’s retirement plan. This is a wakeup call to everyone. DO NOT count on your 401k; take charge of your finances now. Its time for everyone to become personally responsible for their own retirement. Start a savings account, open a CD, and/or get an IRA. Its time! Don’t wait until the next recession to find out that you have to wait on retirement. After working hard your whole life, you deserve some financial security. Create it!
The Best Time To Invest – Recession!
I know everyone has lost money in the stock market due to the recession, but this is the best time to get started. The news has calmed down and found other things to blast us about. Companies appear to have stabilized, unemployment is starting to ease (or at least not making a sky dive into the metaphorical ground). The best part of this is that once things turn around, they go up. Up is good! Getting in the market now means you are getting in the ground floor. Remember the oft and over used saying, “Buy low, sell high”. Its low, time to buy.
Get in and get started. Learn the ropes and make some money. And of course, check back here or subscribe to the RSS for more articles and tips!
