Fools Errand - Waiting on the money
I got this good ( some say foolish) idea of getting a loan @ 6% to trade on my own account in a market that returned 20% average last year. I'm a trader and the restrictions on the market are really low on trading on your own account. I posted earlier asking whether I should/shouldn't trade on the loan and the general feedback was pretty negative. But I am determined. Whether or not this is a fools venture we shall see. So this blog post is the first of many keeping track of the buys and sells, the reasons and will feature the +/- return on my investments. Feel free to comment or advise. I plan on investing 30% on good dividend stocks with the other 70% on momentum stocks (backed by mostly fundamental analysis). Commissions charged are 1.25% per trade. Initial amount is USD 9100. Trading starts 27.6.14.
** Edit - Fast forward 10 months later
So actually took the plunge and oh boy... It was a bad idea. First and foremost I am now down to a QUARTER of the amount initially invested. I spent the first 1k on paying off a debt. Mistake no 1. Then I realized after a month or so that the loan repayments were really eating into my lifestyle and to top that up I moved departments and really got shafted on my salary for the first few months. So taking out about 250 USD pm for about 4 months didn't help. Reducing my monthly expenses, which I thought was easy turned out to be near impossible as I was already living off just what I could afford. Reducing little to almost nothing is not a good idea. So I kept digging into the cookie jar.
I also made the mistake of not holding onto stocks that fundamentally I knew were good but got the yips every so often son whittled good picks into nothing but the lottery. If you are going to play the market:
Don't borrow to buy stocks. In hindsight I was doing pretty well buying what I could afford each month. It wasn't much but the gains were cumulative, there was no pressure on my living expenses and savings and generally.... I was a lot less stressed.
I hope this post helps someone out there make better decisions than I did. I have definitely learned my lesson. Have a great day.
Please elaborate. Do you mean you have been practicing simulations, trade on your e-trade account, or you're actually a professional working at a BB/MM/PT shop? Anyway, the time to do this was 2-3 years ago. Most of the slack will probably be grinded out by the end of 2014/ early 2015.
I'm a professional at an IB.
then i say go for it make sure you get the green light from your firm first, though
please don't blow up WSO with a Soros: Alchemy of Finance like journal of every trade you do. Maybe a blog post at the end of this venture would be helpful, but it will become spammy if you say "bot 1M SWIR, momentum play, relative strength good. /thread" nobody wants to read that.
also, if you're really in PWM (see you selected Investment Advisor as your industry), you will most certainly need to get green-lit from your firm before you do this, there's all kinds of FINRA rules about this.
I'm definitely not going to be breaking any rules or spamming WSO or boring other users. I will blog if and when something significant happens. I'm really curious to see if I will be able to trade with the detachment and composure I need on the job with other people's money.
personally - id love to know so feel free to blog!
You're getting reamed on comms. Also, I'll assume that when you stop posting that you blew up and are busy coming up with a payment plan.
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