Today my purpose is to share what I am doing right now to earn an income which may or may not work for me or someone else. It possibly might point out an income option that many people who are down on their luck right now/or not, might want to consider for themselves. Don't dismiss it as "too risky" until you check it out for yourself. In my opinion there is nothing riskier than being totally dependent on someone else, be it an employer, a pension, or the government, for your entire sustenance. Anyway I will begin sharing what I am doing right now to earn cash as food for thought and/or for entertainment value. If someone has a sincere question about what I'm doing they are more than welcome to post a question and I will try to answer them to the best of my ability or point you to a better opinion than mine.
Sharing daily what and how I am trading stocks and options with the hope of encouraging anyone who might be in need of a way to make some cash is my intent. IMO everyone idealy should start their own small business and to my mind a trading business if successful would be ideal. You can start with only a small amount of money. $500 would probably do nicely. How many small home businesses can you start with just $500, not have employees, major office expenses, etc.? My expenses consist only of internet, computer, Investors.com subscription ($28) and whatever commissions and taxes I must pay. It's great if you can use money it won't kill you to lose but if you're desperate you're desperate! Been there done that. We have to make use of our opportunities. What difference if we go broke this week or a month from now? And you might just turn things around and become well off financially. It's not the end of the world either way. If one simply puts his/her whole-hearted trust in the Lord Jesus instead of this world or one's own abilities, one can even face death with joy and hope. Take it from someone who knows.
Here's what I have done so far: Opened a trading account with an online discount broker like a Scottrade or an OptionsXpress (anyone can virtual trade free with OptionsXpress. To get a feel for the trading business, just open an account for free and begin using the Virtual Trading, under the Toolbox tab. If you like trading and think it's for you then you can fund your account later or go someplace else to open an account). I then signed up with Investors.com http://research.investors.com/ for their 30 day free trial (it's $28 per month ever after). After the market closes I can go to the "Stocks on the Move" screen. There I can easily find all the largest % Volume Change stocks listed along with a handy dandy chart of each stock. I look for stocks that have broken out on heavy volume from a flatish rectangle range formation (look for bars that you can draw a flat rectangle around) of at least 20 days or longer . I place a market order before the open to buy/sell the stock, or (this is my own innovation) a put or call option contract on the stock depending on the direction up or down the stock is breaking out. My goal is to make a 5% gain on the stock's move or 6% loss before getting out. Avoid stocks that have already moved more than 6% away from the rectangle range. I learned this strategy from the Chartman, Gary B. Smith, when he was writing for The Street.com years ago. His winning percentage was 80% using this simple strategy. So far I have done that well trading cautiously due to my inexperience.
Another strategy I have been pursuing using the largest % Volume Change stocks mentioned above is to look for breakaway gaps on heavy volume. These have been working well, also. A book I like that talks about this sort of trading is High Octane Trading by Steve Wirrick. He tells about breakaway gaps on pg. 247.
May 1st I traded the HUM (Humana) breakaway gap on heavy volume by buying May $82.50 put option contracts for $1.95 and sold them last week for $4.42 cuz I was chicken and wanted to bag a profit. However according to Wirrick's book I could have waited (and probably should have) today those same puts are worth over $8. The rule on these gaps are the stock will move the same distance as the wide part of the triangle range the stock was moving in prior to the breakout. Maybe as I get more practiced I will get smarter! However I more than doubled my money and that is good enough for me right now. Greed can get a trader into trouble, but so can fear.
Monday of this week I traded the ACOM (Ancestry.com) breakaway gap/island gap (very bearish according to Wirrick) on heavy volume by buying the June $25 put option contracts for $3.50 when the stock was at $22.44. Just like HUM, ACOM proceeded to go back up (nail biting time) before it has finally headed back down the last 3 days (whew!). Today those puts are in the money as I write, with the stock at $21.30 making the puts worth $4.20 so far. I have a $7 limit order to sell them when the options hit $7. The wide part of the triangle formation this stock was moving in is $13 in width so the stock should move down $13 to about $10 before it stops. If I get brave I may try to ride this one to that level rather than chickening. We will see.
Goals of these posts is to share my failures and successes with others in case they might be of encouragement/entertainment to others who might be in need of an idea or two as to how to make some quick cash (hopefully we will not lose it, but no guarantees I guess). Feel free to ask honest questions about what I'm doing and why.
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