Thoughts on Portfolio Strategy and Aggressive Trading
I’m taking the opportunity tonight (on a Saturday evening) to analyze my trading and investment strategy.
I want to share my current overall strategy because:
1. By doing this I believe I can improve and clarify my overall strategy.
2. There is always room for improvement somewhere, and I did an analysis on SigFig and they say that I’m overly invested in U.S. stocks and I need to put some of the portfolio into Bonds.
I have a confession to make. I’m not really interested in Bonds because I’ve spent so many years analyzing stocks and their companies’ fundamentals.
Now, I don’t believe in just being one type of trader or investor.
I think a portion of your portfolio should be in safer, blue chip stocks that have quarterly dividends. That way, you are also getting some cash back while watching the stock grow. Because that growth is just on paper until you cash it out and sell the stocks.
Another portion of my trading strategy involves aggressively buying and selling stocks for quick profits. Of course, this doesn’t always work out this way in theory, and if a newly purchased position goes South, then I simply try to hold on for the long term. Unless, the stock really goes South, then I wait for a certain sell percentage.
Before, my sell percentage was more than 5%. But now I’m thinking, if a stock DOES go South quickly, I should unload the position at 2% right away.
Anyway, the psychology of the mind is such that, people are essentially greedy. They will wait and wait until the stock bounces back. At least 50% of the time the stock continues to plummet. Keeping losses at no more than 2$ should keep the portfolio in a profitable state.
But basically, my goal is to hold certain stocks for the long-term which also generates dividends. Another part of the portfolio involves investing in Exchange Traded Funds (ETFs) which also generates dividends. And, yet another part are Swing Trades or Momentum trades that catch an uptrend, all traded within a Roth IRA or IRA account so that the trades won’t be recognized by the IRS, and only the profits are taxed when withdrawn as cash.
Swing and Momentum Trades (to mean) can last anywhere from 3 weeks to 3-5 months, depending on given scenarios.
I do a lot of technical analysis with charts and I like to look primarily at the 4-7 day charts, as well as the 6 month charts. I use the following moving averages: 7 day, 25 day, 35 day, 50 day, 200 day
I also use volume, MACD, RSI.