Sunday, August 28, 2016

Virtual Trade


What is a  "Virtual Trade"  I am asked this question every time I mention it to my audience and my followers.  It is a trade that you execute without putting any of your real money in the trade.  Sometimes it is called a  "Paper Trade"   Most brokers offer this on their platform.  They will fund it for you with virtual currency for you to practice trading without using any of your real money in your account.  Most seasoned traders utilize this venue to practice trading or to test out new trading ideas.  It is a   Risk Free  way to sharpen your trading skills.  Personally I use this tool every week.  As a retail trader, I build my  Stock Watch List  every weekend.  I may have just enough capital to execute just one or two stock trades or option trades on the stocks the following week.   I would also place some trades on the virtual account from stocks on my  Watch List  to sharpen my trading skills and to keep me in tune with the markets.  It takes some work to do this but one has to stay disciplined enough to treat each of these virtual trades as if there was real money at risk in the market.  Plan these trades just as you would any other actual trades and journal it to learn from it.


Lessons Learnt From Last Week


There were 3 stock trades that some of my students that I mentor placed on their virtual accounts last week to practice their trading skills.  Two of those trades they got stopped out for -4% loss and the other one is just hovering around the price where it was purchased.  Some very important lessons were learnt with these virtual trades and it was documented in the trade journal for each of these stock trades.  Here are the results of those trades and lessons learnt documented:

  1. $LN trade placed on Monday Aug 22 at $46 entry for  +10%  Profit Exit  at $50.60 and Loss Exit for  -5%  at $43.70  Wednesday Aug 24 we had a distribution day and the stock met its Loss Target.
  2. $VIPS trade placed on Monday Aug 22 at $15.60 entry for  +10%  Profit Exit  at $16.85 and Loss Exit for  -5%  at $14.97  Wednesday Aug 24 we had a distribution day and the stock met its Loss Target
Lesson on $LN ... This is a thin stock trading less than $50 million daily volume.  We prefer to trade only those Growth Stocks that trade more than $100 million daily volume under current market conditions.   Thin stocks are more volatile and it gets harder to hold on to during distribution days.  $LN is also a recent IPO (Initial Public Offering) with only 7 weeks of trading history. 

Lesson on $VIPS ... This stock is very liquid and trades over 7 million shares daily.  It trades over $100 million daily volume.  Stock had surged 53% in the 8 weeks prior to placing the trade but once again, distribution day on Wednesday Aug 24 led the stock to meet its Loss Target.  Ideal entry for this stock was at $15.13  If We had entered the trade at just maximum of 1% past its buy point ($15.28 Entry)  We would still be in the trade in spite of the distribution day on Wednesday.  During summer months of June/July/August/Sept,  We prefer not to go beyond 1% past the ideal buy point.   $VIPS had an RS ratings of 84 and We prefer to look at only those stocks that have an RS ratings above 90

In our mentoring and coaching program, We have certain rules to trading. The two stocks above violated some of those rules.  We developed these rules of trading from experience over the years.  These rules were designed to get the probabilities of winning trades on our side.  


Mentoring Service


We are filling our classes for  September  sessions and there are just a handful of slots left.  If you would like to schedule a FREE 30 minutes of  "Discovery Call"    to explore our mentoring service, please contact us at:

investorspotlight@gmail.com

Market does best between October and May.  This is an ideal time to get into our mentoring program and learn to make profitable trades.  Reserve your slot now before they are all gone.

Happy Trading!

Amin


DISCLAIMER



Do not take a position unless you are prepared to sustain a TOTAL LOSS. Your loss could include the money you invested as well as commissions and transaction charges.


The Information I provide is for education and informational purposes only. The Information provided is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice. The Information provided is general in nature and is not specific to you or anyone else.


YOU SHOULD NOT MAKE ANY DECISION, FINANCIAL, INVESTMENTS, TRADING OR OTHERWISE, BASED ON ANY OF THE INFORMATION PRESENTED WITHOUT UNDERTAKING INDEPENDENT DUE DILIGENCE AND CONSULTATION WITH A LICENSED PROFESSIONAL. You understand that you are using this Information AT YOUR OWN RISK.