Double my money challenge by a beginner

[HappyRunner]

This is my very first trading journal post. Yesterday, I made my first trades in an attempt to become a profitable hobby swing trader. Apologies if I'm using the wrong terminology.

I'm going to be focusing on UK and US shares, holding on to them overnight as a minimum. I'm following a 20% profit, 7% loss model- we'll see if it works... I have a whole £70 to learn with (I need a car so that's where my savings need to go right now). I'm wondering if I can't double it. I know that it's more likely I lose it all, but we'll see!

Right now, I have no idea what reversals, breakouts and retracements are. They've gone on my reading list.

Day 1
I bought the following shares:

bought		total	win/lose	20% win	7% loss		last time at profit goal
06/10/2023​	co.pa	$10		$12	$9.30	under valued	week ago
06/10/2023​	zm	$10		$12	$9.30	over valued	feb
06/10/2023​	fsly	$10		$12	$9.30	under valued	week ago
06/10/2023​	chtr	$10		$12	$9.30	under valued	n/a
06/10/2023​	simo	$10.67		$12.80	$9.92	slightly undervalued	jul
06/10/2023​	mcd	$12		$14.40	$11.16	just right	jul
06/10/2023​	hpq	$12.46		$14.95	$11.59	under valued	aug
06/10/2023​	vod.l	$10		$12	$9.30	very undervalued	may

Why did I buy them? mcd, hpq, vod.l were all familiar while none were over-valued. The rest were all showing low share prices on their 52 week range. They were also big losers from the previous day.

Why wouldn't I buy them again? co.pa is undergoing restructuring, zm is over valued. chtr hasn't reached that 20% profit point in a year, simo is only slightly undervalued. Basically, I don't think I'd touch them knowing what I now know about healthy stock movement. Some of these were a bit flat.

Star trade- co.pa gave me a 7.91% increase in value in the one day

Profit/loss- co.pa +7.91%, fsly +2.74%, zm +2.28%, chtr +0.41%, simo +0.34%, mcd +0.25%, hpq -0.19%, vod.l -0.36%

Feelings- I feel really humbled by how much I have to learn. But I'm also excited and can't wait for Monday.

Portfolio Summary- $85.02 invested + $1.34 profit = £70.60 portfolio value

 

[1nvest]

Hi Happy, hopefully what i say can be construed as constructive and by no means meant to put you off..
in addition to breakouts, retracements and reversals...i would strongly urge you to add "TREND" to that learning list. I'd put it right at the top.

Swing trading, is about looking for pullbacks in a defined trend . you are buying stocks, so you want those stocks to be in an uptrend and looking to pullback with a view to continuing that upward momentum. looking at some of your picks, and take ZM as an example. by no stretch of the imagination is that in an uptrend having already lost 90% of its value since 2020.

statistically, you are far far more likely when buying a stock in an uptrend for it to continue in that direction. positive momentum begets more positive momentum. the same is true in reverse. your picks, by looking at undervalue, is actually moving you further away from your initial goal.
had you chosen those stocks that were close to or hitting new 52 week highs, you will likely hit your target much quicker.

Lets see how you do (and hope you can tell me where to go...) and if you dont hit your targets, and start closing off losing trades, i'd suggest starting again but with a different selection that is more likely to continue going up than the opposite
sincerely, however, good luck though Happy

 

[HappyRunner]

Hi Happy, hopefully what i say can be construed as constructive and by no means meant to put you off..
in addition to breakouts, retracements and reversals...i would strongly urge you to add "TREND" to that learning list. I'd put it right at the top.

Swing trading, is about looking for pullbacks in a defined trend . you are buying stocks, so you want those stocks to be in an uptrend and looking to pullback with a view to continuing that upward momentum. looking at some of your picks, and take ZM as an example. by no stretch of the imagination is that in an uptrend having already lost 90% of its value since 2020.
View attachment 331140

statistically, you are far far more likely when buying a stock in an uptrend for it to continue in that direction. positive momentum begets more positive momentum. the same is true in reverse. your picks, by looking at undervalue, is actually moving you further away from your initial goal.
had you chosen those stocks that were close to or hitting new 52 week highs, you will likely hit your target much quicker.

Lets see how you do (and hope you can tell me where to go...) and if you dont hit your targets, and start closing off losing trades, i'd suggest starting again but with a different selection that is more likely to continue going up than the opposite
sincerely, however, good luck though Happy

Thank you @1nvest . No, I totally agree. I grabbed ZM because, well because it was trading low compared to it's 52 week high. Of course, in just a day or two, I realise that alone is a rubbish reason on its own to have bought it. I'll see how it goes for the next day or so but I'm looking to close out very soon and move on. Your advice is much appreciated.

 

[HappyRunner]

The Weekend
Okay, so as much as I protested about not having any spare cash, I've rounded my deposit up to an even £100. My portfolio is currently sitting at £100.60. So let's see where we go tomorrow. I aim to buy 3 more stocks as well as carefully look at where my current ones are heading (hopefully up). But I won't buy just because I feel I've got to spend my money. Not trading is better than a loss.

I've also got my hands on a copy of 'Swing Trading for Dummies' so I'll be digesting that as quickly as possible. Watched a variety of videos on trading this weekend. Following several including Humbled Trader. And I joined trade2win as well!

 

[timsk]

And I joined trade2win as well!

. . . Your smartest move yet, HR!
You appear to be a 'long only' trader, i.e speculating that the price of your stocks will rise? There's nothing wrong in that per se, (indeed those with certain religious convictions regard it as a moral obligation), but I mention it because as '1nvest' rightly points out - your best bet (quite literally) is to back the prevailing trend - regardless of whether it's up or down!
Tim.

 

[HappyRunner]

. . . Your smartest move yet, HR!
You appear to be a 'long only' trader, i.e speculating that the price of your stocks will rise? There's nothing wrong in that per se, (indeed those with certain religious convictions regard it as a moral obligation), but I mention it because as '1nvest' rightly points out - your best bet (quite literally) is to back the prevailing trend - regardless of whether it's up or down!
Tim.

Thanks, Tim. Honestly, I don't yet know how I would do that yet but I'll definitely look into it. I didn't know it was even a thing. I know, I have a heck of a lot to read, watch and generally consume before I stop being an embarrassment to myself...

 

[timsk]

Thanks, Tim. Honestly, I don't yet know how I would do that yet but I'll definitely look into it. I didn't know it was even a thing. I know, I have a heck of a lot to read, watch and generally consume before I stop being an embarrassment to myself...

HR,
You're not an embarrassment to yourself at all - everyone has to start somewhere. Members who fall into that category are those who've been trading for 5 minutes and enjoyed some beginners luck and then think they know it all.

Taking advantage of a falling market, i.e. betting that it will fall further, is called 'short' selling. I'm guessing that the trades you've taken are with a CFD (Contracts for Difference) or spread betting broker? If so, you will be able to go short just as easily as you can go long. There are advantages and disadvantages to trading this way and these vary according to which market you're trading. For example, if you're short in the equities market (shares), and price goes against you, there's no upper limit to how far price can go. So, theoretically, your risk is uncapped. The reverse is not the case, i.e if you have a long position and the market tanks down, the value of the shares can't fall below zero. So, your risk is capped.

The above example is silly in as much that you're unlikely to stay in a trade where price moves that far against you without either exiting the position first or getting a 'margin call' from your broker. But it can happen - traders can lose everything due to a 'black swan' event. Think 9/11 twin towers attacks. In case you're wondering what a margin call is - it's something you never want to happen but, in reality, if you stick at trading for the long haul - it probably will sooner or latter. Basically, it's a call from your broker to say there are insufficient funds in your account to cover your open position(s) and you have to either deposit more money in the account or close the trade(s). It's a bummer - been there, bought the T-shirt etc! ;-)
Tim.

 

[HappyRunner]

@timsk I'm keeping well away from CFDs at the moment, just going for up swings via regular shares. Given how small my deposit is compared to others, it would be too easy to blow up that way. I'll update today's trades once the nyse closes but as I write, all my shares are in green, even if it's by a hairswidth...

 

[HappyRunner]

So, I was chomping at the bit today to get back to trading and hopefully reversing some of my first day poor decisions.

Stock sold: ZM (+$0.1), CHTR (+$0.07), VOD.L(+$0.12) Why? Because they were moving horizontal and were first day poor choices.

Stock bought: SNAP, VZ, SONY, RWE.DE, LDOS Why? I felt these were at the start of an uptick and are undervalued.

Why wouldn't I buy them again? I need to look at stock which is already trending up properly.

Star trade- CO.PA gave me a 8.06% increase in value in the one day over yesterday!!!

Profit/loss- CO.PA +15.96%, FSLY +6.19%, VZ +1.78%, SONY +0.89%, SIMO +1.21%, SNAP+0.82%, MCD +0.99%, HPQ +0.50%, RWE.DE +0.24%, LDOS +0.21%

Feelings- Mixed. I've had beginner's luck on my top two stocks. I should be grateful I've not lost anything. But 2.15% profit in 2 trading days aint bad. It's more than my savings account gives annually...

Portfolio Summary- $115.02 invested + $3 profit = £102.15 portfolio value

 

[HappyRunner]

Trading Day 3

Stock sold: CO.PA (+$2.16), HPQ (+$0.14) Why? HPQ was trading horizontal. CO.PA reached +21% so triggered take amount.

Stock bought: SRNEQ, XOM Why? These were trending up after a fall.

Star trade- CO.PA reached over 21% before I sold it.

Profit/loss- FSLY +5.10%, SRNEQ+5%, RWE.DE +3.80%, SNAP +3.16%, VZ+2.78%, SIMO +2.63%, SONY +2.25%, MCD +1.62%, LDOS +0.05%, XOM -0.19%

Feelings- Again, I've done alright, I think. Going to have to let things run untouched tomorrow as I'm pretty busy. S/L are in place...

Portfolio Summary- $124.31 invested + $3.36 profit = £103.95 portfolio value

 

[HappyRunner]

Trading Day 4

Stock sold: SRNQ (+$3.94) Why? Reached +20.58% so closed manually.

Stock bought: PEAK Why? Trending up and undervalued.

Star trade- SRNQ- see above.

Profit/loss- SNAP +6.67%, FSLY +4.98%, RWE.DE +4.88%, SIMO +4.15%, SONY +3.25%, VZ +1.85%, LDOS +1.52, MCD +1.36%, PEAK +0.06%, XOM -3.78%

Feelings- Exxon Mobile plunged after I bought it, for reasons I'm not sure. Will hang on to it and trust the stop/loss. I'm away until about 4pm UK time tomorrow so another day where I need to trust in my presets. Very pleased with hitting over 1% a day on average. Long may it continue.

Portfolio Summary- $128.25 invested + $2.82 profit = £106.47 portfolio value

 

[1nvest]

Good going Happy
My view if I may...Exon, has hit resistance for a 3rd time and was firmly rejected at that level last week
Any upside potential will likely be limited to 8%. I agree it has been in an uptrend, and has pulled back.
when do you know its about to resume that trajectory? In my view, when it breaks out past that resistance. then there is nothing in its path.

Alas, i cant share your opinion of your other buy PEAK. definitely not trending up...
We're at the stage now where we'd be expecting to see some upside..santa rally and whats called the presidential cycle. fingers crossed for you

 

[HappyRunner]

Thanks @1nvest I really appreciate you taking the time to explain things to me, especially with the chart you inserted for Exxon.

I was looking at Peak's 1 week and 1 month charts- and thought it was a mellow rise from an undervalued company. Oh well. Live and learn - a stop/loss is applied...I might not keep it for very long then. Scrub it and start over... Thanks for the wake up.

I have to admit that most charting patterns still elude me but I have 2 long bus rides tomorrow I'll utilise to get some quality book learning done so I hope to become less of a numpty/monkey trader subsequently...Need to find me some youtube explanations about charts as well to enjoy this weekend as well.

 

[1nvest]

Thanks @1nvest I really appreciate you taking the time to explain things to me, especially with the chart you inserted for Exxon.

I was looking at Peak's 1 week and 1 month charts- and thought it was a mellow rise from an undervalued company. Oh well. Live and learn - a stop/loss is applied...I might not keep it for very long then. Scrub it and start over... Thanks for the wake up.

I have to admit that most charting patterns still elude me but I have 2 long bus rides tomorrow I'll utilise to get some quality book learning done so I hope to become less of a numpty/monkey trader subsequently...Need to find me some youtube explanations about charts as well to enjoy this weekend as well.

just my opinion, i'll be wrong as well..I dont hold any weight to patterns to be honest, just its last swing high/low is what i would want it to break
as for PEAK. if its this one...it may retrace up, but odds are against. i also look at both monthly and weekly to confirm a trend
again, fingers crossed, every trade provides a learning opportunity. i'll not invade your journal too much, but wish you the best. its a long journey

 

[HappyRunner]

Thank you @1nvest. You're not invading my journal at all. I really appreciate your opinions!

 

[timsk]

. . . I have to admit that most charting patterns still elude me but I have 2 long bus rides tomorrow I'll utilise to get some quality book learning done so I hope to become less of a numpty/monkey trader subsequently...Need to find me some youtube explanations about charts as well to enjoy this weekend as well.

Hi HR,
Like all my posts to anyone about anything, what follows is just my opinion and does not constitute advice about what you should - or should not - do.
That said, I fully endorse the 1nvest's comment: ". . .I don't hold any weight to patterns to be honest, just its last swing high/low is what i would want it to break. . ."

You can spend years learning chart patterns with the net result that you'll disappear up your own fundamental with little or no improvement to your trading. I am of the view that ‘traditional’ time based candlestick charts are one of the reasons why many traders struggle. Unless you’re Al Brooks, and understand what each candle means - or what a pattern created by a group of candles means - and what all of that tells you about buying and selling pressure - then trading using time based candlesticks is the devil’s own job. Non-time based charts largely eradicate this problem, cut out market ‘noise’ and are much easier to understand. Easiest of all are Renko charts, as every ‘brick’ looks the same. Range charts (my 'go to' chart) sometimes do have wicks, which is a sign of indecision, i.e. that the balance of power between buyers and sellers may (note emphasis) be shifting. On the other hand, successive candles with no wicks (or only very small wicks) indicate that either the bulls (in an uptrend) or the bears (in a downtrend) are in control. Swing highs and swing lows stand out clearly to alert you to potential areas of future support and resistance (S&R). Nice 'n simple.

If you want to investigate technical analysis, my suggestion would be to get good at the basics first and focus on higher highs and lower lows and S&R. If, over time, you find you need the granular detail afforded by candlestick charts - by all means go on a deep dive down the rabbit hole of chart patterns. If you decide to take that route, then Al Brooks is the obvious first port of call. For your interest, below is a 100 Range chart of the this morning's action on the Dax. So, the high to low (or low to high) of each candle is 100 points. The red and green lines is the Donchian Channel indicator which highlights the relevant recent swing highs and lows, which I like it because I'm too lazy to draw them in by hand! ;-)
Tim.

 

[timsk]

. . .And another range chart, this time of PEAK. I've selected 200 range as this best approximates 1nvest's monthly chart, so you can make a comparison. That said, his doesn't include the x and y axis data - which makes comparing the two a little tricky!

 

[HappyRunner]

Trading Day 5 AKA "The Apocalypse"

Stock sold: SIMO (+$0.35) SNAP (+$0.93) SONY (+$0.58), XOM (-$0.44), PEAK (-$0.80), AVTR (-$0.82) Why? Felt that they had reached their resistance levels or were only going to fall further. Went for a general clean out of my positions. Except for AVTR which was a ruddy disaster and fell almost 7% in a matter of hours after buying, automatically triggering a stop loss. My first really big mistake.

Chart for AVTR showing big range of movement today which I jumped ship from due to my trading plan.

Stock bought: AVTR, F, LLY, RTN.L, HFD.L, META, NOC, ALLE Why? Tried to spot upward trends, or at the very least that they weren't plunging into an abyss (which I failed with AVTR which promptly fell over a cliff...) But from now on, I'm using the finviz charting, not eToro.

Star trade- SONY (+4.83%)

Profit/loss- RWD.DE (+3.21%), FSLY (+0.51%), NOC (+0.44%), LDOS (+0.32%), LLY (+0.29%), F (-0.17%), RTN.L (0.3%), MCD (-0.52%), ALLE (0.92%), META (-1.07%), HFD.L (-1.10%)

Feelings/What I learned- Discovered that the line charts on eToro aren't helping me- I'm getting a better picture using the Finviz website for the candlesticks. Will see if that helps me. Feel I'm slowly understanding the very basics of candlestick charts now. If anything, I'm now recognising rubbish stocks more easily but finding it very hard to identify something positive. I guess that's where a better knowledge of the technical side comes in. Ready to pick myself up and carry on.

Portfolio Summary- $128.04 invested + $0.08 profit = £105.16 portfolio value (ouch!)

 

[1nvest]

Evening Happy
You're still in the game, so it could be a lot worse..some things to bear in mind whilst you're reflecting

you really cant do any analysis unless you have the right tools. It doesnt mean it has to come at a cost.
Take a look at TradingView (www.tradingview.com). Its free, and that's all you need for your analysis.

when it comes to picking the right stocks there are some "tried and tested" pointers
1) what is the broad market doing. uptrend, look for longs, downtrend, short or dont trade or look for uncorrelated asset classes
2) which sectors are outperforming the chosen markets you're looking at
3) pick outperforming stocks from the best sectors

if the broad market is doing poorly, when there is a bad day/week. everything suffers
if the sector is doing poorly, there will be a high correlation between all stocks in that sector. even if the sector is doing well, but the broad market is doing poorly, the sector can also suffer, but not as much as others
and then finally, once you know which sector to be in, its time to find the right stocks.

Most important again is trend
ditch the idea that you are looking for value. you're not looking for value, you're looking for momentum
you want the best performing stocks in the best performing sectors.
rank all stocks by their momentum, choose the top ten

look for any stocks making new highs. make sure moving averages are all going your way, make sure momentum is positive.
these are the best indicators for telling something is in an uptrend. finviz can screen these for you
start with monthly, its got to be in an uptrend, weekly, also in an uptrend but you want it pulling back

one last thing, sometimes its worth have a predefined watchlist, rather than choosing from potentially thousands.
get to know each one of them. perhaps the top 5 in the each of the sectors, will give you a list of 50 stocks or so to choose from. that way you dont need then finviz, or any screener. Dow 30, S&P 100 for example these are just examples of ready made lists that make it easy to narrow down.

This still doesnt mean its all gonna go your way, but at least this way, you're stacking up the cards to work for you, rather than against

 

[HappyRunner]

Thank you @1nvest. Okay- I've bookmarked TradingView. Thanks for that.

I've picked out some possibles for tomorrow- trending upwards without resistance:

I'll further filter them in the morning by sector and readjust my portfolio again if necessary.

And I'll stop getting all wrapped up in value. I won't look at the E/P

Fingers crossed!