So, anyone who has read my first articles will know that my first love is bitcoin trading (sorry boys). However, a company I have recently come across, First Global Credit, offers the ability to trade stocks using bitcoin as collateral…OK, I think, why not give it a go!
So after a brief discussion with them, they have kindly agreed to support the type of trading I want to do (more on my personal strategy below). In a nutshell, I cover a broad range of stocks looking for the right setup. When that setup occurs, I want the ability to enter the order (or orders) but only open a maximum of two positions from the list on any day. To add to my problem – they are stop entry orders.
To facilitate this trading they have agreed to me providing a spreadsheet to them every day. They will track the orders and ensure only two of the orders are opened in the day. “Perfect, oh, and by the way, did I mention I may all of a sudden need extra markets added at short notice?” Well – those nice people at First Global Credit agreed they would try and accommodate that as well! How kind and I’ll let you know how it goes 🙂
So this, from my perspective, is a real-time experiment. I’ve deposited 24 bitcoins (approx. $5500 – but you should all know that already). FGC will provide me 5 x leverage so I will take up to 12 positions, each position will be for 30% of my account value at the time of the trade (making 360% leverage on a fully maxed set of positions).
Each day I will publish my orders and running PnL balance and will tweet the executions. Let the experiment begin 🙂 I’ll publish my first orders later today for Mondays’ trading.
For those who are interested my strategy is as follows:-
First – overall direction of trade. As any readers of my bitcoin trade articles will already know, I’m a big fan of Dow Theory. I’ve adapted the approach for bitcoin trading but for my stock trading I’m going to follow the approach advocated by Jack Schannep. For readers unfamiliar with Dow Theory and the various “flavours” there is an excellent blog that I read a lot, www.dowtheoryinvestment.com, it’s free (always good and every girl loves a freebie!) and has some great articles explaining the theory as well as good, up to date, commentary.
So, once I’ve established the current primary market trend (up at the moment), all my short term trades will be in the direction of the current primary trend. Next, which trades to place …………..
I have a market scanner that checks all the NYSE and Nasdaq stocks looking for stocks that have the following characteristics:
- They have established a dynamic trend in the same direction as the identified primary market trend.
- They have undergone a short term reversal against that trend
- They are short term oversold
I will then narrow the list of candidate orders to no more than 20 orders – many days there will be less or none at all 🙁. Of these 20 I want to open a position in no more than 2 in any given day.
Stocks that meet these characteristics are bought if they breach the previous days high (or sold if they breach the previous days low). Any positions are held until the close 5 trading days after entry when they are exited.
Using this approach I will have a maximum of 12 positions (assuming 2 are opened every day of the preceding week).