My Approach

I am often asked questions regarding my trading strategies, but recently I have seen an increase in questions that have to do with comments I make regarding a trade in a particular account.

With that in mind, I thought I would put a little detail in to how my trading is set up from an account perspective. I run 4 accounts:

  • Daytrade
  • Swing
  • Options
  • Long Term

A large part of my trading activity is in the first 3 listed accounts with the Daytrade account being the most active. For me, it has just been easier to utilize the different accounts with a strategy focus for each. I do not have all the accounts at one broker either – I like to have the ability to work around issues that may reside with having only one vendor.

Of course there are some caveats to this structure. For example, I do end up with option trades in the other 3 accounts at times. Also, a trade in the Daytrade account will turn in to a swing for various reasons.

My LT account contains stocks that I view as good investments, and I will sell calls against them each month for additional income. This will cause me to have to re-enter from time to time as the stock is called away. So be it. IBM is an example. ORCL is another.

Hopefully that helps provide a little more insight into my approach. Trade ’em well.

 

6 thoughts on “My Approach

  1. I really enjoy “So Be It” and was hoping that you might bring this topic up when I (5_2_1) asked you about this earlier in the week. I had noticed that your stops on a trade was less than 5% and you said that you manage your Swing Account differently. If you don’t mind my asking at what % wise do you usually find yourself placing your stops for that account?

    In addition, you noted that you have an Option account as well. You’re very much aware of the huge gaps between the bid/ask ie PCLN for some options. I’ve found this can render stops almost useless if you’re out of a trade before you even got in it. What is your risk management plan in that arena?

    Thanks for all you do in twitterland and I appreciate the information you share in your journal. I really look forward to each new entry. Hope you enjoy your weekend.

  2. First, thanks for taking the time to read the blog. I am glad you enjoy it. As for your questions, let me take one at a time.
    1) I typically use an ATR of 2 on Swing trades, but often I am doing pullback buy so I don’t need a lot of room to the downside. It varies, but in reviewing my September Trading Journal the highest was 6% and many were less than 2%.
    2) On options trades, there are too many variables to answer your question. With that in mind however, I don’t leave the option trade wide open either. Since I do many Risk Reversal trades, the stop on the options can get REALLY wide as it needs wiggle room to work. An example is the November 125/100 Bear R/R that I have on in NFLX. The stop on that sold call is more than 30%. I am comfortable with that as I have until November. For this week, I lost 100% on an AMZN weekly Put buy. But, the risk is defined (was under a buck). I can live with that.

  3. 1nvestor,

    Would you mind sharing some other stocks you like for a long term account besides IBM and Oracle?

    Thanks, Joe F

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