Swing Trading with $300 – Week Three

Empty board swing covered in lichen.

This week I ran right into my old nemesis. My unwillingness to cut losses when a swing trade goes against me. Hope, fear, and pride all play a part. I am hopeful the share price will recover and move in my direction. I fear losing money or being wrong. I am proud of a win streak and don’t want to break it.

Pride over a win streak is especially true in this $300 swing trading exercise. I have completed six swing trades, and in all of them I was able to enter and exit a few days later with profit. It is hard to break a win streak. If I hold on to the stock, there’s a chance of recovery. It is not a realized loss until I sell. But is it really a win if I’m holding and tying up funds for several weeks? That money is no longer working for me in a swing trading capacity and is moving into investment territory. Nothing wrong with investing. Most of the funds in my account are dividend income investments. But buy and hold investing is not the goal for this $300.

Swing Trading?

Now technically swing trades can last several days to several weeks. I do not want to let myself off on technicalities though. My strategy is to get in and out of positions every few days. I want to keep momentum strong, build the account rapidly, and hone swing and even day trading skills. I’m not calling this trade a loss yet, but it is pushing that boundary.

My timing was off when I entered two positions at the end of April. The market had several days of roaring upward movement. I got caught up in that. It had been pretty easy pickings. Dive in on a dip and sell on the inevitable spike. I had been watching Invesco (IVZ) for a few weeks as they slowly climbed back after a disappointing earnings report dip. With the market rallying, I thought the momentum would carry the stock price back to the nine dollar range in a hurry. I bought shares at $8.74 right as the rally peaked and the next downturn started. Oops. I watched it stall and then failed to set a stop loss to get out and move on to the next opportunity.

I’m holding nineteen shares, and I’m still watching the share price descend. On the plus side, I have held through an ex-dividend date so I did earn a dividend. Again, dividend income is not the goal here, but I won’t turn it down.

Trading Ford Again

My play in Ford (F) had a much more positive and speedy outcome than IVZ. However, I still held longer than I had hoped. This is one where I jumped into the position right at the end of the day so I’d have the option of selling the next day. Ford had been hanging out in the $5.30-40 range, so when it dropped and leveled off at $5.11 I opened the trade. Turns out $5.11 wasn’t the bottom of that range. It was the start of a descent into a new lower range. I was able to complete the swing six trading days later for a small gain.

Swing Trades for Week 3

Earned $2.95 in dividends by holding IVZ through its ex-dividend date. This is a quarterly yield of 1.77% on my cost basis.

Bought 37 shares of F at $5.11. Sold at $5.17. Gain of 1.17% and $2.22 in profit.

Summary and Analysis of Week 3

Completed one trade and qualified for a dividend payment earning $5.17. Trading account balance at $369.88, and increase of 23.29%. Increased account 1.42% from last week’s ending balance of $364.71.

I already did a bit of analysis above so not going to add too much more here. This week I had my smallest gain in dollars and in overall percentage. My early momentum broke down correlating with the overall market slow down. I want to keep an eye on that trend. When swing trading, there is great opportunity to be had in rallying markets and declining markets. It takes more patience and skill to sniff out the opportunities in a declining market. At least that is my experience.

I am aware of my hesitation to set and stick with stop losses. And I need to improve my entries to avoid buying at peaks or on the downturn from a peak. These will be key focus areas for me as I move forward with this swing trading exercise.

Thanks for tagging along. I plan to be back next week with another update.

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