Trading to Increase your Position

In my review of Alessio Rastani’s free Webinar The Absolute Beginner’s Guide to Trading I said the below quote and now I want to talk about that subject a bit.

With his help from his FREE blog I have been able to effectively increase certain stocks by trading in the short term while looking to the long term.  But that is a different topic for a different day.

See, due mainly to my subscriptions with certain newsletters (like Casey Research’s newsletters) a good portion of my wealth is invested in long term speculations.  I think that gold and silver will still increase another 50%-75%, maybe more, over the next few years.  I think Uranium is near it’s bottom and will go up as Oil starts to become more expensive.  These are long term speculations; not strict investments like positive growth companies or funds.

With such speculations, you never want to be fully out of the market, or out of a stock.  Why?  Because the world is full of black swan events, meaning events that no one knows will happen but once it happens the market quickly shifts to adapt.  Say you are invested in Uranium, you decide to pull 100% out and wait until it bottoms.  Okay, great; I hope you know when that is but say instead that next week Israel attacks Iran and Iran closes down the straight of Hormuz.  Oil skyrockets in price and suddenly Nuclear Energy isn’t looking so bad.  Uranium goes up.  You miss out because you fully pulled out.  Never fully cash out on any speculation that you truly want to stay with.  As Alessio has stated, don’t try to catch the peaks in stocks; you will most likely fail and lose a lot of money in the process.  Don’t try to time you speculations.

Cameco Uranium

But what you can do is this: Trade your speculations to increase your overall holdings.  Take a look at this chart, this is my recent transactions with a Uranium Company Cameco.  If I had taken Alessio’s Webinar I wouldn’t have made these mistakes and saved myself from losing money.

See those up arrows?  That is when I bought.  I finally took my losses in the single downward arrow.  Perfect example of what NOT to do.  Bought High and Sold Low.  That mixed with the mindset of “It’s fallen so much now, surely it will go up” which is when I bought in again, only halfway through it’s current fall.  And is it done yet?  Tough to say.  Depends on oil’s price and any increase in damage from Fukushima.  As of now I’m not back in, but now I’m watching the technicals for a good entry point.

Here’s another chart:
First Majestic (AG) TradingAgain the upwards arrows are “Bought” and the downward arrows are “sold”.  The Left-most arrow is an error that could have been avoided.  According to moving averages, it was a perfect time to SELL, and what did I do?  I BOUGHT.

However, what I really want to focus on are the two right arrows, they are a buy/sell pair.  Using some of the knowledge gleened from the webinar I was able to buy near the white support bar and sell once it returned to it’s 21 day Moving Average.  Now that was a very short term play, I didn’t know it would pan out quite like that.  But what it allowed me to do was effectively increase my current speculative stock holdings (it’s a silver mining company) for FREE, and that is the whole point of this post.

How did I increase my Long Term Speculative Play on AG?  The difference between my buy and sell trades was 12% but if I only sell what I need to get my original trading cash off the table I have left over long-term stocks.  

Example: One buys 100 shares of AG, then next day it increased 12%.  Selling 89 shares will now get you back your original investment and you are left off with 11 shares of AG.  Now, obviously this comes at a price of not growing your trading fund, but if you are going long on certain things this is a great method.

Has anyone used similar methods with any success?  I’d love to hear about it or any cautions you may have.

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