Swing Trading, Round 2: Sell & Profit

Roughly a month ago I wrote about how cheap some companies were trading in North America, like Silver Wheaton and Halliburton Co. And there was a 75% chance that the stock market will move up in the short term based on my unique analysis of how much people were saving. So I started another swing trade and hoped to make a profit in the months to come, just like before.
Reasoning behind my timing
Reasoning behind my stock choices

Well earlier this morning, I sold both my holdings and due to leverage, made 19% return on my investment, or $380. Details below…

Dec 17th 2011
Starting Cash: $2000 ($1000 CAD + $1000 USD)
BUY (SLW.TO)   $29.76 x 66 shares = $1964.16 CAD (Only had $1000 so borrowed the remaining $964.16 on a line of credit)
BUY (HAL.NE)   $31.60 x 63 shares = $1990.80 USD (similarly borrowed $990.80 on a line of credit)
Final Cash: $0
Owes Bank: $1954.96 CAD/USD mixed currency

Jan 19th 2012
Starting Cash: $0
SOLD (SLW.TO)  $31.72 x 66 shares = $2093.52 CAD ( $129.36 gain)
SOLD (HAL.NE)  $36.38 x 63 shares = $2291.94 USD ( $301.14 gain)
Final Cash: $4385.46 combined
Still Owes Bank: $1954.96

After paying back the initial bank loan ($1954.96), plus interest ($9.60), plus trade commissions ($39.96), I’m left with $2380.94.
$2380.94 – $2000.00 = $380.94 profit.

I shouldn’t combine currencies like that, but I’m lazy and since we’re basically at parity it shouldn’t make a huge difference anyway. I sold because I had to follow my initial exit strategy. I wrote last month that I would sell if either stock rose by 10 to 15%, and Halliburton past 15% today. It’s important to have a plan before you buy and stick with it so you don’t let greed and emotions dictate your actions later on. I used Halliburton (HAL.NE) for my first swing trade as well but it under-performed back then. This time however it did exceptionally well. You never know with these things so that’s why I usually buy 2 stocks at a time, to mitigate the risks. Maybe both these stocks will go up another 10% next month, but I’m happy with my results and will wait for another opportunity in the future.
Some people say you can’t time the market, but I think they just haven’t found the right strategy yet. I think history tells us that there are some relationships between the charts that I mention on this site and how they affect the stock market. Certainly not 100% correlated, but even if it’s 60%, 70%, or 80% then that’s still better than randomly guessing. Swing trading can be fun, but also very risky, especially if you borrow to trade.

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niterainbow.com
01/20/2012 1:43 am

This is a very good result! Congrads! You put $2000 in and made $380 out of it, nearly 200% a year : -)

Looking forward to read more!

Liquid Independence
01/20/2012 7:50 am

Cheers mate. If only I could keep this up I'd be the richest bloke around town.

youngandthrifty
01/20/2012 10:35 pm

Are you a usual swing trader?

My BF has been getting into and I've been kind of feeling wary for him lol.

Liquid Independence
01/21/2012 4:41 am

I only swing trade when I see a good opportunity, which actually isn't very often. Good luck to him!

The Starving Artist (Canada)
01/22/2012 4:58 pm

I'm always leery of trading USD based equities in non-registered accounts. I'm annoyed that the CRA makes the accounting so tedious. (Which is why I don't DRIP any of my US non-registered holdings)

Liquid Independence
01/23/2012 8:32 am

I know, the tax system here is really complicated. And we don't even have a national securities regulator. I try to hold US stocks in my RRSP first, then TFSA. Non-reg is kind of like a last resort. If only they would increase the maximum contribution room to registered accounts.