My Plan for 5% a Month.
My Plan for 5% a Month.
How I strive to earn 5Rs (5%) a Month In the Canadian Stock Market
Hello, it's me once again - Roberto. After I wrote my first article on the Canadian Stock Market, a rush of new ideas came to me. I realized that there are many Canadians interested in knowing more on how to trade the Canadian market profitably and without getting knocked out by the USD currency Exchange.
So here is my playbook
At the core of my playbook, I want to start with a valuable lesson that I learned. The first time I applied it, it developed into a major contributing factor to changes in my personal finances.
The Principle of paying yourself first
Let us take the principle of paying yourself first and propel it beyond the finance component. What if, every morning, you paid yourself first with your time? I mean think about it; is there something you wish you could do more? Is there something in which you wish you invested more time? For some it might be losing an extra 10lbs, learning a new skill, reading a certain book or investing in real estate. The list is infinite.
What I enjoy most about this principle is its flexibility. After achieving a certain goal, you can move on to other opportunities. I am talking about using this principle to accelerate your learning process and to get to the cruising altitude. Once you have reached it, you can start another venture and get that to its cruising altitude as well. Before you know it, your life will change significantly.
My path to trading the stock market
I have been learning to trade the stock market for almost four years now. My path towards being a profitable trader has brought me from soul wrenching failures to earth shattering breakthroughs. However, every failure served as a new brick to the foundation of success that I enjoy today. For the ultimate failure is not a result, rather the ultimate failure is never trying.
Truthfully, the stock market has taught me many life lessons. Firstly, it will definitely make you humble. It will teach you to see things for what they are and not what they should be and to act in such instances. The stock market education will also transpire to lots of areas in your life. It has taught me to be a better negotiator at work, notably in regards to my salary and employee benefits, with my clients and my personal life as well.
How I trade 5 Rs a month
Every morning I wake up one and a half hours before it is time to get ready for my day. I pay myself first with what I wish to accomplish and contribute. Currently, I have been paying myself first with meeting my desire to be a profitable trader because I know that when I am profitable, I can do more with my money, my time and those I love.
Wake up 6:30am: Get the coffee running, sit at my computer, and ready myself for some analysis.
I like to keep my list of TOP 10 stocks I like to trade. I first take a look at those; if I spot a trade, there is no need to look for new ones. Trading profitably is about consistency, following your trading plan and not over trading.
My current top 10 are
1) Manulife (MFC.TO)
2) Couche-Tard (ATD.B.TO)
3) Canadian Natural Resources Limited (CNQ.TO) 4) Sunlife (SLF.TO) 5) Royal Bank of Canada (RY.TO) 6) Toronto-Dominion (TD.TO)
7) TransCanada Corporation (TRP.TO)
8) Potash Corporation of Saskatchewan Inc (POT.TO)
9) Enbridge Inc (ENB.TO)
10) Teck Resources Limited (TCK-B.TO)
Each stock trades above 1 million shares daily, they are optionable and provide lots of opportunities for different types of trades.
6:35am: Go over my top 10 and look out for potential trades. The strategy I have has the most success with is clearly the 'buy at support and sell at resistance'. When looking at my top 10, I clearly have my support/resistance lines formed and ask myself where do I want to buy this? At what price am I definitely a buyer and where will I set up my stop? I make sure to have a 1 to 3 risk to reward ratio. Therefore if I risk 1$ my intention is to make 3$. Here is a snapshot of my first trade in September, with my analysis written so you can get a real feel of my thought process.
This has been my most fortunate trade this year and the strategy is always the same. On August 30th I saw ENB.TO come downwards from a channel phase. Well, I said I definitely want to buy it at 51.01$ and I will place my stop at 49.91$ which is just below the gap in April 2016 which should serve a support and the Wide Range Bar from August tells me there will be great support coming in.
Once I found the trade I went to go place a limit order on ENB and it got triggered the next day. While I was at work serving clients my trade got triggered with proper risk management and once my trade is triggered I also have my stop loss and profit taker order set up.
By 6:50am- 7am: I have pretty much gone over my top 10 and if I see potential trades I take them. When I have three to choose from in the same day, I choose one or two that I feel have more edge.
If I do not see any potential trades, I go on TMXMOENY.COM and look out for potential trade set-ups. I look at the volume bullish trades only and do some analysis on three to five stocks to see if there are any potential high probability trades. To quickly go over the list, the stock must have traded 1 million shares, share price must be over 5$ and must be bullish.
In this list I am able to see ECA.TO and HBM.TO. In this case I would do some analysis on these two stocks to see if there are any trade possibilities. After doing the analysis taught by Real Life Trading educational videos, I have been able to spot an opportunity on HBM.TO (I want to mention that I have spotted this trade exactly as I was writing this article. It literally took me less than three minutes to do all of this).
Subsequently, I would enter my buy set up the following way: Buy limit order HMB.TO shares at 5.13$, attach stop loss at 4.71$ and profit take order at 6.39$.
It is now 10:35 AM Sunday. I can literally set up this trade now and see if it gets triggered tomorrow.
In this real life example, I would be done in 30 minutes
I would then enjoy the remainder of my 60 minutes, reading a new book, learning additional education in trading the stock market or work on my current project of launching a "how to navigate through college successfully" program.
My other rules are never be in more than two trades at one time when swing trading. My goal is 5R a month. Therefore, if on my first trade, I have gained 3Rs in the first week, I will cherry pick my next trade with the uttermost patience and high edge probability to obtain my 5Rs. As soon as I have reached my 5Rs for the month, I am done. No over trading, no over analysis, no more. I focus simply on other ongoing projects.
For the time being I am working full time, investing in real estate, refining my goals, objectives and getting myself back into shape. 5Rs monthly currently makes a significant impact in my life and provides me with more choices and freedom.
My current objective is to keep my trading effective, not too time consuming and I want it to be exciting. It is a must for me to make my trading REAL. That means I owe it to myself to take money out of my account every month when profitable. Currently I use 50% of my gains to treat my self and those I love. Life is worth living, giving and enjoying. The other 50% goes toward a turnkey ETF moderate portfolio to increase my gains and have that money work towards another goal: buying a revenue property.
For my full time workers, I invite you to give this a try. Think about how 5Rs a month would change in your life. What new outcomes could it bring to you? What would you do or give?
There you have it, my playbook towards trading 5Rs monthly. What is your playbook like?