OnlineTrading Monthly Results

HIS ONLINE STOCK TRADING PLAN, STRATEGIES AND IDEAS already tested and updated after a period of almost 12 weeks in a live trading environment, Marginal Stock Trader finally decided to close all his outstanding positions this month in preparation for a fresh start by August 2009 and this time with little bits of trading lessons learned here and there.

Start low
We said in one of our early post Make a Living As a Day Trader that we would start with just one trade per week and a very low weekly profit goal of 30 pesos. We managed to make 6 trades out of 12 weeks and even made a weekly profit of 29 pesos as of May 2009 on the average.

Delayed reaction
Beginning June 2009, we started to learn something about technical analysis, Japanese candlesticks, long position and short position, and Minor Top and Minor Bottom. We made decisions based on our understanding of technical indicators. We also tested the limits of our stop loss strategy based on the Minor Bottom of 270 pesos for Ayala Corporation stock at that time.

This month's result was a disaster. We got our first lesson in losing money through our biggest single loss so far of 370 pesos equal to about 4% of our trading equity. We looked away from our original stop loss rule and ended up selling at the bottom price of 265 pesos.

Add to this is our misreading of the trend that triggered a decision to go long on Ayala Corporation at 312.50 pesos, which turned out to be the top for an entry price.

Loss-limit system
By the 9th week since we entered our first order in live trading at the Philippine Stock Exchange through our online broker BPI Trade, Marginal Stock Trader added an important element in our stock trading plan that allows us to better put a cap on our losses: a loss-limit system.

This system placed our single trade loss limit at 2% and our maximum monthly losses at 6% based on our equity in our trading account. Our Weekly Total Equity Tracker shows that as of July 24, 2009, our month-to-date losses was cut by more than half to about 3% compared to 7% a week before.

Stock portfolio
For the period May 11, 2009 to July 27, 2009, our stock portfolio consisted of just one issue, Ayala Corporation, our online broker is BPITrade, and we only trade common stocks at the Philippine Stock Exchange.