Jan 282013
 

In December of last year I wrote about the Santa Claus rally. It’s this interesting occurrence when the stock market rallies during the holiday season. Based on statistics and historical data the Dow Jones grew 80% of the time during this period, and the S&P500 gained 1.5% on average. Of course swing trading is risky, and there are no guarantees you’ll make money. But if you’ve bought stocks and then sold them during this Santa Clause rally in the past, then 8 out of 10 years you would have made money on the index, for example, by buying the etf DIA, which tracks the Dow :0)  Don’t know about you but that sounds like some pretty good odds to me. So on Dec 21st, I spent about $3000 to buy some Amazon and Bank of America stocks and hoped the overall market would rise and carry my stocks with it so I can make a quick profit :D

After the Santa Clause rally however, the stock market continued to climb. Must be the January effect, which I’ll explain in another post. No point selling on an uptrend they say. But earlier today I didn’t like how my 2 stocks were performing so as I’ve already mentioned on Twitter, I sold both and completed my swing trade. In the end I’ve made $140. Mission complete. This swing trade was a success :0) That’s a 4.6% return in roughly 1 month. Not too shabby.

swing trade successful

Initial Investment: $2975.70

Fri, Dec 21st, 2012
Bought: 6 shares of  AMZN.Q at $257.23 = $1543.38
Bought: 128 shares of  BAC.N at $11.19 = $1,432.32
Total money spent buying stocks: $2975.70

Today, Monday, Jan 28th, 2013
Sold: 6 shares of AMZN.Q at $280.27 = $1681.62
Sold: 128 shares of BAC.N at $11.52= $1474.56
Total money earned from selling stocks: $3156.18

Difference: $180.48

Expenses:
Commission: 4 trades x $9.99 = -$39.96

Net profit after expenses: $140.52 (pre-taxes)

So not a whole lot, but enough to buy another can of sturgeon roe haha. But most likely I’ll use the money to cover the commission on my next 14 trades :0) I think both Amazon and BoA will continue to grow their businesses in the long term, but I’m not sure about the short term risks they’re facing so that’s why I sold. I mentioned my exit strategy going into this swing trade from the start, and I stuck to my plan :) A small profit is still better than nothing lol.

Best part about this particular swing trade strategy is that it’s based on a reoccurring annual event, the Santa Claus rally, which just to be clear is not guaranteed to perform well every single year, but based on historical evidence, does so most of the time (^v^)I’ll definitely be doing it again at the end of this year.

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Random Useless Fact: The surrounding temperature around a person can affect his or her appetite. A person in a colder room is likely to eat more than if that person was in a warmer room.

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  15 Responses to “Swing Trade, Round 6: Sell and Profit”

  1. I don’t know if temperature helps my eating habits. Cold (19C in the house) or hot (summer), food is always welcome in my stomach.

  2. Nice work! I, for one, am not enjoying the rally, as I have made my 2013 TFSA contribution and I want to buy something!! :)

    Food is definitely always welcome in my belly as well! :)

  3. The best clue for when to sell a stock comes from the issuing company, itself. If a company’s earnings stop growing, if its top management quits or is forced out, if it stops creating new products, or its products aren’t receiving regulatory approval, the company’s shares could be headed for a fall. :)

    • Good point. Amazon recently released their up to date numbers and fell short of Wall St’s expectations and their stocks dropped 5% yesterday. But it’s sometimes hard to say because they are back up again today :0)

  4. Yeah, I’m not sure if this is a wise trading pattern. I think you could do much better if you hold it for a bit longer – I’m still holding Amazon and BoA, Amazon is up 35% and BoA is up 52% since I bought it. And I don’t want to sell. This quick stuff like buying and dumping it two months later sounds like a good way to lose money, not invest. Almost like gambling. Just sayin’, not knocking you.

    • I agree, It’s not a wise trading pattern. I’m just doing it for fun with money I can afford to lose, which is 10% of my savings. The other 90% go towards a buy and hold strategy like yours. Wish I had that kind of insight to buy AMZN and BAC when you did. That would have been a great investment ^_^ I might pick up these companies again later on.

      • LOL, I got no wisdom, but I do follow some websites that once in a while offer very good advice! One of them is Fool.com, it’s free to use, and they also have absolutely awesome podcasts – one of them comes out on Fridays and a daily one too with less content. Both of these stocks I picked up with their advice. Check it out, might give you some trading ideas – they have the same buy and hold strategies.

  5. Great ROA on Bend Over America. BofA! ;-) (I hate that institution with a passion) lol

  6. I normally trade in lots of either $5,000 or $10,000 so that I can maximize my percentage gains.
    I found that when I traded with less I lost too much in brokerage and I often needed to make 5-10% profit just to break even.

    As and example you lost almost 20% of your profit in brokerage if you would have traded in larger lots then that percentage decreases and you don’t need to stay in the stock as long to make a decent profit.

    Of course the drawback to this is that you need a fairly large trading account to be able to do this.

  7. I like Bank of America, I would have liked to own it at a cheaper price.

    • I’m planning to jump back in if they dip lower again. I think as long as the US government is willing to bail out the financial sector there will be less risk for investors in US banks.

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